This thesis analyzes volatility of small capitalization biopharmaceutical stocks after significant one-day price drops. Stock performances after one-day declines of ten percent or greater for companies in the NASDAQ Biotechnology Index were gathered from 2011-2012 to test for evidence of market overreaction. While no substantial evidence was found for overreaction, long-term performance suggested that traders underreact during the initial stock drop, with underreaction most prevalent in stocks seeing an initial one-day drop of at least twenty percent. Overreaction only appeared present when companies saw a stock drop due to negative pipeline results.
"The Colorado College Investment Club was established in December of 2003 and was entrusted with the management of the Investment Club’s own portfolio. This portfolio was funded through the generosity of private investors...The Investment Club is a student run organization that educates members about the financial markets, investing, and portfolio management."--p. 3