Weight Watchers International Case Study

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To some extent we have all seen the effect of announcements, surprises and/or expected returns on a company’s stock. The news of Oprah partnership with Weight Watchers International (WTW) is a very good example. In the chapter we learned that this announcement is made up of two parts, the expected part plus the surprise. The expected is based on what is already expected whereas the surprise part is comprised on systematic and unsystematic risk. Systematic risks effects large classes of assets such as inflation whereas unsystematic risk effects unique classes of assets such as strikes or shortages that are industry specific. Additionally, as the chapter pointed out that with diversification unsystematic risk can be eliminated whereas systematic

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