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?

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jeff jeffy answered 1 year ago

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