I. Calculating the Return of the Chosen Stock:
For this exercise, I will choose Netflix, Inc. (NFLX) as the stock.
To calculate the return of the chosen stock, we need the closing prices for the two weeks prior to the news, the day of the news, and the two weeks after the news.
Closing Prices:
Two Weeks Prior: $550
One Day Prior (Day of News): $560
Two Weeks After: $590
Return Calculation:
Calculate the return for the two weeks prior to the news:
Return = (Closing Price – Initial Price) / Initial Price * 100
= ($550 – $560) / $560 * 100
= -1.79%
Calculate the return for the day of the news:
Return = (Closing Price – Initial Price) / Initial Price * 100
= ($560 – $550) / $550 * 100
= 1.82%
Calculate the return for the two weeks after the news:
Return = (Closing Price – Initial Price) / Initial Price * 100
= ($590 – $560) / $560 * 100
= 5.36%
II. Impact of the News Article on Stock Price:
Based on the provided data, it appears that the news article had a positive impact on Netflix’s stock price. The stock experienced a small negative return of -1.79% in the two weeks prior to the news. However, on the day of the news, the stock price increased by 1.82%, and in the two weeks after the news, it continued to rise with a return of 5.36%. This suggests that the news had a positive effect on investor sentiment and confidence in Netflix’s future prospects.
III. Calculating Percentage Change of CBOE 10-Year Treasury Yield:
To calculate the percentage change of the CBOE 10-year Treasury yield, we need the yield values for the two weeks prior to the news, the day of the news, and the two weeks after the news.
Yield Values:
Two Weeks Prior: 1.50%
One Day Prior (Day of News): 1.45%
Two Weeks After: 1.55%
Percentage Change Calculation:
Calculate the percentage change for the two weeks prior to the news:
Percentage Change = ((New Yield – Initial Yield) / Initial Yield) * 100
= ((1.50% – 1.45%) / 1.45%) * 100
= 3.45%
Calculate the percentage change for the day of the news:
Percentage Change = ((New Yield – Initial Yield) / Initial Yield) * 100
= ((1.45% – 1.50%) / 1.50%) * 100
= -3.33%
Calculate the percentage change for the two weeks after the news:
Percentage Change = ((New Yield – Initial Yield) / Initial Yield) * 100
= ((1.55% – 1.45%) / 1.45%) * 100
= 6.90%
IV. Impact of News Article on Bond Yield:
Based on the calculated percentage changes, it appears that the news article had a mixed impact on the CBOE 10-year Treasury yield. In the two weeks prior to the news, there was a positive percentage change of 3.45%, indicating an increase in yield. However, on the day of the news, there was a negative percentage change of -3.33%, suggesting a decrease in yield. Interestingly, in the two weeks after the news, there was a significant positive percentage change of 6.90%, indicating an increase in yield.
This suggests that while there may have been some initial uncertainty or market reaction on the day of the news, overall, investors reacted positively to the news and increased their demand for Treasury bonds, leading to higher yields in subsequent weeks.
Please note that these calculations are based on hypothetical data and real-world stock and bond market dynamics can be influenced by a multitude of factors beyond a single news article.
