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On November 4, 2019 McDonalds Corporation fired its CEO for having a consensual relationship in the workplace. The following data on their stock price, the
- On November 4, 2019 McDonalds Corporation fired its CEO for having a consensual relationship in the workplace. The following data on their stock price, the level of the S&P 500, and the risk-free interest rate come from the days surrounding the announcement:
| Day | McDonalds Price | S&P 500 | Risk free rate |
| November 1 | 197.78 | 3050.72 | .000046 |
| November 4 | 190.16 | 3078.96 | .000046 |
| November 5 | 189.65 | 3075.10 | .000046 |
McDonalds has a Beta of .26.
- (20 points) What is the expected return for McDonalds from the CAPM for November 4 and 5?
- (20 points) What is the actual return of McDonalds for November 4 and 5?
- (20 points) What is the cumulative abnormal return for McDonalds for these two days? If the market capitalization (Price * shares outstanding) for McDonalds is $149.949B, how much did the firing of the CEO cost McDonalds shareholders?
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