Market Model (Abbr.: mm): The 'market model' considers the focal firm's individual CAPM risk by multiplying the market return with the firm individual $\beta$ factor: $\alpha_i+\beta_i R_$ are the factor sensitivities or loadings of stock $i$.
The following models are implemented in this website's event study research apps: whuber at 15:58 Add a comment 2 Answers Sorted by: 21 The exact equation is given in: Venables, W. box text are used to determine if any autocorrelation remains in the residuals. 1 R s formula is further analyzed and explained at /questions/81754/. In the context of event studies, expected return models predict hypothetical returns that are then deducted from the actual stock returns to arrive at 'abnormal returns'. Expected return models can be grouped in statistical (models 1-5 below) and economic models (models 6 and 7). The simplest method to predict stock volatility is an n day standard. Expected return models are widely used in Finance research.
