Over the weekend prior to April 3, 2000, a U.S.District Court ruled that Microsoft Corp.is a monopoly.On Monday, April 3, Microsoft's stock return was -14.47%, while the return on the S&P500 (the 'market') was 0.49%.For the two years leading up to this date, the 'market model' relationship between Microsoft's daily returns and the market's daily returns was as given below.Using this market model relationship, compute the 'abnormal return' on Microsoft's stock on April 3, 2000.
R_MSFT=0.19% + 0.60(R_MKT) + $\varepsilon$ .

Question

Over the weekend prior to April 3, 2000, a U.S.District Court ruled that Microsoft Corp.is a monopoly.On Monday, April 3, Microsoft's stock return was -14.47%, while the return on the S&P500 (the 'market') was 0.49%.For the two years leading up to this date, the 'market model' relationship between Microsoft's daily returns and the market's daily returns was as given below.Using this market model relationship, compute the 'abnormal return' on Microsoft's stock on April 3, 2000.
R_MSFT=0.19% + 0.60(R_MKT) +

\varepsilon

.

Quizplus · Accepted Answer

The Answer of Over the weekend prior to April 3, 2000, a U.S.District Court ruled that Microsoft Corp.is a monopoly.On Monday, April 3, Microsoft's stock return was -14.47%, while the return on the S&P500 (the 'market') was 0.49%.For the two years leading up to this date, the 'market model' relationship between Microsoft's daily returns and the market's daily returns was as given below.Using this market model relationship, compute the 'abnormal return' on Microsoft's stock on April 3, 2000. R_MSFT=0.19% + 0.60(R_MKT) + $\varepsilon$.

Over the Weekend Prior to April 3, 2000, a U ε\varepsilonε

Over the Weekend Prior to April 3, 2000, a U $\varepsilon$