Abnormal return - AT&T and TCI and S&P500 Index Example
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On Wednesday June 24, 1998, AT&T announced its intent to acquire TCI. The assets of obtained in the acquisition helped create AT&T Broadband. Three years later, on Monday July 9, 2001, Comcast announced its intent to purchase the Broadband assets from AT&T.
a) Given the following data, what was AT&T's abnormal return at the announcement of the TCI acquisition?
Date AT&T stock price S&P 500 index
06/23/1998 32.2566 1119.49
06/24/1998 29.6045 1132.88
b) Given the following data, what was AT&T's abnormal return at the announcement of the Comcast bid?
Date AT&T stock price S&P 500 index
07/06/2001 16.6846 1190.59
07/09/2001 18.6604 1198.78
c) Do you think the results in Parts A & B are related?
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Solution Summary
The solution computes abnormal return by given examples of AT&T & TCI & S&P 500 Index.
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