1 2 3 4 CT 5 Day Event Price 0 1 0 1 0 1.00 1.30 1.25 1.02 1.01 1. (10pts) Compute the log prices. Fill in the blanks: 2. (10pts) Compute the daily log returns. Fill in the blanks: 3. (10pts) What is the average daily return? 4. (10pts) What is the average daily return during event days? 5. (10pts) Is the following statement true or false? Stock returns are higher on event days. Note that points are only given to answers with explanation. 6. (10pts) Is the following statement true or false? On event days, stock return volatility goes up substantially. Note that points are only given to answers with explanation. 7. (10pts) We now know that earnings announcements were released in day 2 and 4. Only on day 2, earnings were positive. Is the following statement true or false? "Stock returns are higher on positive earnings announcement days." Note that points are only given to answers with explanation. 1 2 3 4 CT 5 Day Event Price 0 1 0 1 0 1.00 1.30 1.25 1.02 1.01 1. (10pts) Compute the log prices. Fill in the blanks: 2. (10pts) Compute the daily log returns. Fill in the blanks: 3. (10pts) What is the average daily return? 4. (10pts) What is the average daily return during event days? 5. (10pts) Is the following statement true or false? Stock returns are higher on event days. Note that points are only given to answers with explanation. 6. (10pts) Is the following statement true or false? On event days, stock return volatility goes up substantially. Note that points are only given to answers with explanation. 7. (10pts) We now know that earnings announcements were released in day 2 and 4. Only on day 2, earnings were positive. Is the following statement true or false? "Stock returns are higher on positive earnings announcement days." Note that points are only given to answers with explanation