In: Finance
An index model regression applied to past monthly returns in
Ford’s stock price produces the following estimates, which are
believed to be stable over time:
rF = 0.1% + 1.1rM
If the market index subsequently rises by 7.1% and Ford’s stock
price rises by 7%, what is the abnormal change in Ford’s stock
price? (Negative value should be indicated by a minus sign.
Do not round intermediate calculations. Round your answer to 2
decimal places.)