The following graph represents the Cumulative Average Abnormal Return (CAAR) for the stocks of companies targeted for take-over.   Which of the following statements is true?   a. In a weak form efficient market, t* is the actual takeover event (i.e. the time when the legal takeover transaction is completed)   b. In a semi-strong form efficient market, t* is the takeover announcement event   c. In a strong form efficient market, t* is the acquiring company takeover decision event (i.e. the time when an acquiring company decides to launch a takeover)   d. (a) & (b)   e. (b) & (c)

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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The following graph represents the Cumulative Average Abnormal Return (CAAR) for the stocks of companies targeted for take-over.

 

Which of the following statements is true?

  a.

In a weak form efficient market, t* is the actual takeover event (i.e. the time when the legal takeover transaction is completed)

  b.

In a semi-strong form efficient market, t* is the takeover announcement event

  c.

In a strong form efficient market, t* is the acquiring company takeover decision event (i.e. the time when an acquiring company decides to launch a takeover)

  d.

(a) & (b)

  e.

(b) & (c)

CAAR
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t*
event time
Transcribed Image Text:CAAR 0 t* event time
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