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On November 4, 2019 McDonalds Corporation fired its CEO for having a consensual relationship in...

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Finance

  1. 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.

  1. (20 points) What is the expected return for McDonalds from the CAPM for November 4 and 5?
  2. (20 points) What is the actual return of McDonalds for November 4 and 5?
  3. (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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