Calculate

i the three-day return earned by your firm for the period from the day before

the announcement day to the day after the announcement date; and

the two-day return earned by your firm for the period from the day of the

announcement to the day after the announcement date

(ii) Calculate the market return for the corresponding periods in (i).

(iii) Calculate the excess return: (i) - (ii)

(f) Compare and discuss the relevant theory for the findings of the market reaction

to dividend changes in (e(iii)). In your discussion, include signalling hypothesis,

free cash flow hypothesis, and the clientele hypothesis.

Please give examples or detailed formulas to explain this problem

D A 1 Date 2 day-3 3 Day -2 4 Day - 1 5 Announcement Date (Day 0) 6 Day +1 7 Day +2 8 Day +3 9 B C Return Index of your compar Market index on the same date 5 5801.7 6 6709 2.9 5771.2 3 5733. 6 6 5733. 8 6 5775 8 5867 D A 1 Date 2 day-3 3 Day -2 4 Day - 1 5 Announcement Date (Day 0) 6 Day +1 7 Day +2 8 Day +3 9 B C Return Index of your compar Market index on the same date 5 5801.7 6 6709 2.9 5771.2 3 5733. 6 6 5733. 8 6 5775 8 5867