Problem 14-1 Cumulative Abnormal Returns

Delta, United, and American Airlines announced purchases ofplanes on July 18 (7/18), February 12 (2/12), and October 7 (10/7),respectively.

  

Delta			United			American
Date	Market Return	Company Return	Date	Market Return	Company Return	Date	Market Return	Company Return
7/12	?.42	?.63	2/8	?.91	?1.22	10/1	.62	.40
7/13	.00	.32	2/9	?1.01	?1.22	10/2	.52	.69
7/16	1.26	1.46	2/10	.52	.32	10/3	1.22	1.22
7/17	?1.26	?1.08	2/11	.72	3.34	10/6	.22	?2.58
7/18	?2.21	1.11	2/12	?.42	?.19	10/7	?2.32	?.45
7/19	?.85	?.70	2/15	1.22	2.78	10/8	.62	.62
7/20	?.91	?1.14	2/16	.62	.62	10/9	?.42	?.19
7/23	.73	.53	2/17	?.42	?.22	10/10	.42	?.25
7/24	.22	.01	2/18	.42	.30	10/13	.00	?.22

   

Given the above information, calculate the cumulative abnormalreturn (CAR) for these stocks as a group. (A negativeanswer should be indicated by a minus sign. Leave no cells blank -be certain to enter "0" wherever required. Do not roundintermediate calculations and round your answers to 2 decimalplaces, e.g., 32.16.)

  

	Abnormal returns (Ri –R­M)
Days from announcement	Delta	United	American	Sum	Average abnormal return	Cumulative abnormal return
?4
?3
?2
?1
0
1
2
3
4