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

C) 8.15 percent

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

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