You perform an event study of a stock's return on the day of an earnings announcement. The stock had a return of 8% that day. The market return that day was 1%.

You use the following regression model for the event study: r_t= .2 + .6 r_Mt What was theabnormal returnof the stock on the day of the earnings announcement?

7.2%

8.8%

3%

7.4%