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Problem 14-1 Cumulative Abnormal Returns Delta, United, and American Airlines announced purchases of planes on July...

Problem 14-1 Cumulative Abnormal Returns

Delta, United, and American Airlines announced purchases of planes on July 18 (7/18), February 12 (2/12), and October 7 (10/7), respectively.

  

              Delta              United          American
Date Market
Return
Company
Return
Date Market
Return
Company
Return
Date Market
Return
Company
Return
7/12 −.42 −.63    2/8 −.91     −1.22     10/1 .62    .40    
7/13 .00 .32      2/9 −1.01 −1.22     10/2 .52    .69    
7/16 1.26 1.46      2/10 .52 .32     10/3 1.22    1.22    
7/17 −1.26     −1.08      2/11 .72     3.34     10/6 .22    −2.58    
7/18 −2.21     1.11    2/12 −.42     −.19 10/7 −2.32    −.45    
7/19 −.85     −.70      2/15 1.22 2.78     10/8 .62    .62    
7/20 −.91 −1.14    2/16 .62     .62     10/9 −.42    −.19    
7/23 .73     .53    2/17 −.42     −.22 10/10 .42    −.25    
7/24 .22     .01      2/18 .42     .30     10/13 .00    −.22

   

Given the above information, calculate the cumulative abnormal return (CAR) for these stocks as a group. (A negative answer should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

  

Abnormal returns (Ri – R­M)
Days from announcement Delta United American Sum Average abnormal return Cumulative abnormal return
−4                  
−3                  
−2                  
−1                  
  0                  
  1                  
  2                  
  3                  
  4                  

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