1. Explain why you would use the geometric mean instead of the arithmetic mean of the returns, since inquiring minds just want to know.
2. With a risk tolerance of 5% and a returns loss threshold of 5%, calculate, explain, and interpret the cash and marketable securities weights with a $100 million total cash and marketable securities initial value.
3. Briefly explain why the share-market impact of the announcement of an LBO might be so different to that of the other corporate restructuring transactions studied by Eckbo and Thorburn.