1)Consider a company which follows each earnings announcement calls with a published news release. Assuming it can be measured, which of the following would best characterize the event date/time?

a)When the earnings announcement call begins

b)When key information (e.g., EPS) is revealed during the earnings announcement call

c)When the earnings announcement call ends

d)When the news release is published

2)Consider an event study analysing the stock market reaction to certain corporate event which may reveal positive or negative news about the company. Which of the following options best describes the appropriate null hypothesis?

a)The event will have either a positive or negative effect on raw, non-market adjusted stock returns

b)The event will have either a positive or negative effect on market adjusted stock returns

c)The event has no effect on raw, non-market adjusted stock returns

d)The event has no effect on market adjusted stock returns

3)Why do we use generally use abnormal (or market adjusted) returns in event studies in Finance?

a)Stock price movements contain systematic components that should be factored out when measuring the impact of the event on the stock price.

b)Stock price movements contain idiosyncratic components unrelated to the market that should be factored out

c)Because there was an event, the stock price movement is independent of the market. So, we need to factor the market out.

d)We need to add the market return to the stock return to ensure that we only capture the effect of the event.