Investment Formula Problems (11 in total) SEE SPREADSHEET

homework4.xlsx

Sheet1

Problem 7-1
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. (Negative values should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 1 decimal place.)
Date	Market Return (%)	Company Return (%)
7-Nov	1.5	1.1
8-Nov	1.3	1.1
9-Nov	−1.2	−.2
10-Nov	−.6	−.4
11-Nov	2.3	1.0
14-Nov	−1.1	2.8
15-Nov	.1	.1
16-Nov	.9	1.7
17-Nov	1.2	.6
18-Nov	−1.2	.0
19-Nov	1.3	.2
Daily	Cumulative
Days from	Abnormal	Abnormal
Announcement	Return	Return
−5
−4
−3
−2
−1
0
1
2
3
4
5

Problem 7-5
Ross Co., Westerfield, Inc., and Jordan Company announced a new agreement to market their respective products in China on July 18 (7/18), February 12 (2/12), and October 7 (10/7), respectively. Given the information below, calculate the cumulative abnormal return (CAR) for these stocks as a group. Assume all companies have an expected return equal to the market return. (Negative values should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 1 decimal place.)
Ross Co.	Westerfield, Inc.	Jordan Company
Date	Market	Company	Date	Market	Company	Date	Market	Company
Return	Return	Return	Return	Return	Return
12-Jul	-0.1	-0.4	8-Feb	-0.1	-0.4	1-Oct	1.3	0.5
13-Jul	1.1	0.3	9-Feb	-0.2	-0.4	2-Oct	1.2	0.5
16-Jul	0.5	0.4	10-Feb	0.5	0.6	3-Oct	0.8	1.3
17-Jul	-0.6	-0.2	11-Feb	0.7	2	6-Oct	-0.1	-0.8
18-Jul	-0.9	1.3	12-Feb	-0.1	0.1	7-Oct	-2.3	-0.8
19-Jul	-1.8	-0.2	15-Feb	1.3	1.8	8-Oct	1.3	0.5
20-Jul	-0.9	-0.2	16-Feb	0.7	0.6	9-Oct	-0.5	-0.5
23-Jul	0.6	0.4	17-Feb	-0.1	0	10-Oct	0.1	-0.1
24-Jul	1.1	0	18-Feb	1.5	0.4	13-Oct	-0.2	-0.6
Abnormal returns (Ri – RM)
Days from announcement	Ross	W’field	Jordan	Sum	Average abnormal return	Cumulative average residual
-4
-3
-2
-1
0
1
2
3
4

Problem 8-1
Use the data below to construct the advance/decline line for the stock market. Volume figures are in thousands of shares and are from November 2-6, 2009. (Input all amounts as positive values. Do not round intermediate calculations. Round your answers to the nearest whole number.)
Stocks	Advancing	Stocks	Declining
Advancing	Volume	Declining	Volume
Monday	1,641	846,553	1,450	695,242
Tuesday	2,448	428,360	1,836	452,321
Wednesday	1,647	625,869	1,458	721,652
Thursday	2,459	1,121,452	557	175,063
Friday	1,772	513,670	1,479	496,085

Adv. / Dec.	Cumulative
Monday
Tuesday
Wednesday
Thursday
Friday

Problem 8-2
Construct the Arms ratio on each of the five trading days. (Do not round intermediate calculations. Round your answers to 3 decimal places.)

Stocks	Advancing	Stocks	Declining
Advancing	Volume	Declining	Volume
Monday	1,631	787,133	1,512	646,144
Tuesday	2,083	578,360	1,668	451,537
Wednesday	1,637	625,119	1,520	721,034
Thursday	2,481	1,115,416	551	174,445
Friday	1,700	512,206	1,473	496,835
Arms ratio
Monday
Tuesday
Wednesday
Thursday
Friday

Problem 8-3
The table below shows the closing monthly stock prices for Amazon.com and Google during 2011. Calculate the simple three-month moving average for each month for both companies. (Input all amounts as positive values. Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the "$" sign in your response.)

AMZN	GOOG
January	$172.64	$607.61
February	175.29	618.80
March	186.43	579.71
April	202.46	546.10
May	194.29	518.62
June	206.79	500.38
July	229.17	605.19
August	209.08	538.71
September	218.63	513.74
October	214.11	597.69
November	194.54	595.04
December	174.5	651.40
AMZN	GOOG
March	$	$
April
May
June
July
August
September
October
November
December

Problem 8-4
The table below shows the closing monthly stock prices for Amazon.com and Google during 2011. Calculate the exponential three-month moving average for both stocks where two-thirds of the average weight is placed on the most recent price. (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the "$" sign in your response.)

AMZN	GOOG
January	$	176.24	$	616.31
February	177.69	625.28
March	193.99	571.25
April	210.44	548.50
May	191.41	506.14
June	209.55	493.18
July	237.15	606.99
August	201.7	536.01
September	221.51	512.18
October	214.83	603.75
November	197.24	589.82
December	176.18	658.00
AMZN	GOOG
March	$	$
April
May
June
July
August
September
October
November
December

Problem 8-6
A group of investors was polled each week for the last five weeks about whether they were bullish or bearish concerning the market. Construct the market sentiment index for each week based on these polls.(Do not round intermediate calculations. Round your answers to 4 decimal places.)

Week	Bulls	Bears
1	66	63
2	55	96
3	61	88
4	64	95
5	28	44
MSI
1
2
3
4
5

Problem 8-7
You are given the following information concerning the trades made on a particular stock. Calculate the money flow for the stock based on these trades. (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole dollar. Omit the "$" sign in your response.)

Price	Volume
$	70.04
70.07	2,700
70.05	2,200
70.04	2,600
69.05	2,750
70.31	3,500
70.22	3,800

Price	Up/Down Plus	Price times	Positive Money	Negative Money	Net Money
Volume	Flow	Flow	Flow
$	70.04
70.07
70.05
70.04
69.05
70.31
70.22
Money flow at the end of the day	$

Problem 8-10
Use the data below to construct the advance/decline line and Arms ratio for the market. Volume is in thousands of shares. (Input all amounts as positive values. Do not round intermediate calculations. Round your "Arms ratio" to 3 decimal places.)

Stocks Advancing	Advancing Volume	Stocks Declining	Declining Volume
Monday	1,640	944,111	440	66,203
Tuesday	2,713	884,531	659	209,567
Wednesday	1,619	517,257	1,395	498,300
Thursday	2,200	927,436	825	313,301
Friday	1,853	592,823	1,190	383,828

Adv./Dec.	Cumulative	Arms ratio
Monday
Tuesday
Wednesday
Thursday
Friday

A stock had the following trades during a particular period. What was the money flow for the stock? (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Do not round intermediate calculations. Round your answers to the nearest whole dollar. Omit the "$" sign in your response.)

Price	Volume
$	82.45
82.41	2,400
82.42	2,800
82.45	2,700
82.44	2,850
82.47	1,100
82.48	1,800
82.52	600
82.51	1,400
82.53	3,000

Price	Up/Down	Price times	Positive Money	Negative Money	Net Money Flow
Volume	Flow	Flow
$	82.45
82.41		$	$	$
82.42
82.45
82.44
82.47
82.48
82.52
82.51
82.53

Money flow at the end of the day	$

Below you will find the closing stock prices for eBay over a three-week period. Calculate the simple three-day and five-day moving averages for the stock. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Date	Close
4/23/12	$	37.18
4/24/12	37.00
4/25/12	36.60
4/26/12	36.86
4/27/12	36.12
4/30/12	36.29
5/1/12	36.36
5/2/12	36.40
5/3/12	37.09
5/4/12	37.19
5/7/12	37.12
5/8/12	37.28
5/9/12	37.61
5/10/12	37.76
5/11/12	37.59

3-day	5-day
4/23/12
4/24/12
4/25/12	$
4/26/12
4/27/12		$
4/30/12
5/1/12
5/2/12
5/3/12
5/4/12
5/7/12
5/8/12
5/9/12
5/10/12
5/11/12

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