Problem 4 (15 marks) Nearmap Limited (ASX:NEA) was recently attacked by a short-seller, J-Capital, on Thursday 11" February 2021. The short-seller claimed that NEA's projection of growth in the U.S. markets was overstated. Additionally, they claimed that the company understated the level of competition. NEA management quickly responded to the claims on Monday 15 February 2021. The following table provides trading data on NEA and the broad market index ASX200 around the event. Date Price ($) Shares (in mil) ASX200 Index 4/02/2021 2.28 492.37 6765.496 5/02/2021 2.44 492.37 6840.531 8/02/2021 2.37 492.37 6880.677 9/02/2021 2.29 492.37 6821.225 10/02/2021 2.33 492.37 6856.904 11/02/2021 2.16 492.37 6850.109 12/02/2021 Trading Halt 492.37 6806.741 15/02/2021 2.57 492.37 6868.916 16/02/2021 2.59 492.37 6917.274 17/02/2021 2.77 492.37 6885.221 Conduct an event study to answer the following questions. You need to detail and explain your steps and calculations. Answers should be supported by your calculations. A. (6 marks) What was the impact of the short attack on the firm value on the 11" February 2021? B. (5 marks) The short-seller started their $10mil short position on 5 February 2021 and closed out the position on 17th February 2021. What would be their profit/loss during the trading period? C. (4 marks) Do you think that the company failed or succeeded to defend against the short- seller's attack? Explain. Problem 4 (15 marks) Nearmap Limited (ASX:NEA) was recently attacked by a short-seller, J-Capital, on Thursday 11" February 2021. The short-seller claimed that NEA's projection of growth in the U.S. markets was overstated. Additionally, they claimed that the company understated the level of competition. NEA management quickly responded to the claims on Monday 15 February 2021. The following table provides trading data on NEA and the broad market index ASX200 around the event. Date Price ($) Shares (in mil) ASX200 Index 4/02/2021 2.28 492.37 6765.496 5/02/2021 2.44 492.37 6840.531 8/02/2021 2.37 492.37 6880.677 9/02/2021 2.29 492.37 6821.225 10/02/2021 2.33 492.37 6856.904 11/02/2021 2.16 492.37 6850.109 12/02/2021 Trading Halt 492.37 6806.741 15/02/2021 2.57 492.37 6868.916 16/02/2021 2.59 492.37 6917.274 17/02/2021 2.77 492.37 6885.221 Conduct an event study to answer the following questions. You need to detail and explain your steps and calculations. Answers should be supported by your calculations. A. (6 marks) What was the impact of the short attack on the firm value on the 11" February 2021? B. (5 marks) The short-seller started their $10mil short position on 5 February 2021 and closed out the position on 17th February 2021. What would be their profit/loss during the trading period? C. (4 marks) Do you think that the company failed or succeeded to defend against the short- seller's attack? Explain
