A large US conglomerate reported $182m net income for its third quarter this year. The company's net loss for the same quarter last year was $70m. Sales for the quarter were up to $1,528m as compared to $1,340m the previous year. The consensus analysis forecast was $82m.

The earnings were released at 4:30 pm on a Wednesday. The closing stock price for the week and the corresponding SP 500 index level are found in the following table:

	Monday	Tuesday	Wednesday	Thursday	Friday
Stock	6.86	6.56	6.70	7.29	7.05
SP 500	1348.59	1355.54	1359.60	1368.73	1365.64

in a conference call on Friday, the CEO complained that investors underestimated the importance of the earnings announcement.

You run a regression on the stock (using return data, not price data as shown above) with Microsoft Excel where the SP 500 is the

independent variable and get the following output:

Regression Statistics

Multiple R 0.680608321

R Square 0.463227687

Adjusted R Square 0.461063283

Standard Error 0.011826247

Observations 250

ANOVA

	df	SS	MS	F
Regression	1	0.029932984	0.02993298421	4.0208494
Residual	248	0.034685312	0.00013986
Total	249	0.064618295
	Coefficients	Standard Error	t Stat	P-value
Intercept	0.00004201	0.000748096	1.526133842	0.128250823
X Variable 1	0.77900235	0.0516055421	4.62945144	2.30867E-35

Do you feel that the increase in the share price was consistent with efficient securities market theory? Is the CEO's conclusion correct or incorrect? Explain and show any calculations (to get full marks you must calculate the abnormal return).