A Simple Model to Estimate Bounds on Total Market Gains and Losses for a Particular Stock

Investors sometimes buy stock on the basis of premature or inflated announcements by companies. When the expectations are not realized, the investors may sue a company for the losses incurred. This paper describes a model that can be used to estimate bounds on the total loss the investors may have suffered by trading in such a stock. The results of the model are also useful to defendants willing to settle out of court. An actual implementation is reported, though the names and numbers have been changed.