An abnormal return is calculated as:

A) expected return less risk-free rate
B) expected return less market return
C) actual return less market return
D) actual return less expected return

Question

An abnormal return is calculated as:

A) expected return less risk-free rate
B) expected return less market return
C) actual return less market return
D) actual return less expected return

Quizplus · Accepted Answer

The expected rate of return on a share may be compared with the actual rate of return on a share,and differences are then termed excess or abnormal returns.That is,the residual returns are abnormal when compared with prior expectations.

An Abnormal Return Is Calculated As