Question
In: Finance
On November 4, 2019 McDonald’s Corporation fired its CEO for having a consensual relationship in the...
- On November 4, 2019 McDonald’s Corporation fired its CEO for having a consensual relationship in the workplace. The following data on their stock price, the level of the S&P 500, and the risk-free interest rate come from the days surrounding the announcement:
|
Day |
McDonald’s Price |
S&P 500 |
Risk free rate |
|
November 1 |
197.78 |
3050.72 |
.000046 |
|
November 4 |
190.16 |
3078.96 |
.000046 |
|
November 5 |
189.65 |
3075.10 |
.000046 |
McDonald’s has a Beta of .26.
- (20 points) What is the expected return for McDonald’s from the CAPM for November 4 and 5?
- (20 points) What is the actual return of McDonald’s for November 4 and 5?
- (20 points) What is the cumulative abnormal return for McDonald’s for these two days? If the market capitalization (Price * shares outstanding) for McDonald’s is $149.949B, how much did the firing of the CEO cost McDonald’s shareholders?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
On November 4, 2019 McDonald’s Corporation fired its CEO for having a consensual relationship in the...
On November 4, 2019 McDonald’s Corporation fired its CEO for
having a consensual relationship in the workplace. The following
data on their stock price, the level of the S&P 500, and the
risk-free interest rate come from the days surrounding the
announcement:
Day
McDonald’s Price
S&P 500
Risk free rate
November 1
197.78
3050.72
.000046
November 4
190.16
3078.96
.000046
November 5
189.65
3075.10
.000046
McDonald’s has a Beta of .26.
(20 points) What is the expected return for McDonald’s...
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When most firms were struggling in 2008, McDonald’s increased
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Headquartered in Oak Brook, Illinois McDonald’s net income nearly
doubled during that time from $2.4 billion to $4.3 billion—quite
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their 16th “Most Admired Company in the World” in terms of their
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On November 14, Thorogood Enterprises announced that the public
and acrimonious battle with its current CEO had been resolved.
Under the terms of the deal, the CEO would step down from his
position immediately. In exchange, he was given a generous
severance package. Given the information below, calculate the
cumulative abnormal return (CAR) around this announcement. Assume
the company has an expected return equal to the market return.
(A negative value should be indicated by a minus sign.
Leave no...
On November 14, Thorogood Enterprises announced that the public and acrimonious battle with its current CEO...
On November 14, Thorogood Enterprises announced that the public
and acrimonious battle with its current CEO had been resolved.
Under the terms of the deal, the CEO would step down from his
position immediately. In exchange, he was given a generous
severance package. Given the information below, calculate the
cumulative abnormal return (CAR) around this announcement. Date
Market Return (%) Company Return (%) Nov 7 1.7 1.3 Nov 8 1.5 1.3
Nov 9 -1.4 -0.2 Nov 10 −0.6 −0.5 Nov...
On November 14, Thorogood Enterprises announced that the public and acrimonious battle with its current CEO...
On November 14, Thorogood Enterprises announced that the public
and acrimonious battle with its current CEO had been resolved.
Under the terms of the deal, the CEO would step down from his
position immediately. In exchange, he was given a generous
severance package. Given the information below, calculate the
cumulative abnormal return (CAR) around this announcement. Assume
the company has an expected return equal to the market return.
(A negative value should be indicated by a minus sign.
Leave no...
On November 1, 2019, the account balances of Swifty Corporation were as follows. No. Debits No....
On November 1, 2019, the account balances of Swifty Corporation
were as follows.
No.
Debits
No.
Credits
101
Cash
$ 2,390
154
Accumulated Depreciation—Equipment
$ 2,170
112
Accounts Receivable
4,230
201
Accounts Payable
2,610
126
Supplies
1,830
209
Unearned Service Revenue
1,200
153
Equipment
13,020
212
Salaries and Wages Payable
734
311
Common Stock
10,806
320
Retained Earnings
3,950
$ 21,470
$ 21,470
During November, the following summary transactions were
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Nov. 8
Paid $ 1,650 for salaries due employees, of which...
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On November 1, 2016, Campbell Corporation management decided to
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Case No. 4 On November 8, 2019, Jabal Oman LLC sold goods on credit to a...
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Prepare general journal entries to
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b) the year end accrual of interest
at December 31
the payment of the note on January 31.
Problem 4 (7 pts.)
During the first quarter of 2020, Pouncey Products sold 40,000
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2% of these units to be returned...
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