173k views
2 votes
If the abnormal return for a stock during the first week is +5 percent and +3 percent during the second week, what is the abnormal return for the two-week period?

A) 5 percent
B) 3 percent
C) 8.15 percent
D) 8 percent

1 Answer

5 votes

Answer:

C) 8.15 percent

Step-by-step explanation:

The computation of the abnormal return for the two week period is as follows:

Abnormal return is

= (1 + first week abnormal return) × (1 + second week abnormal return) - 1

= (1 + 5%) × (1 + 3%) - 1

= 1.0815% - 1

= 8.15%

Hence, the correct option is c.

We simply applied the above formula so that the correct value could come

And, the same is to be considered

User Thejoshwolfe
by
8.7k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories