EMU is in a bidding war with WMU to acquire Ypsi.Ypsi stocks are currently trading at $65/share• WMU has already made an offer of $75• The intrinsic value of Ypsi to EMU is $95What bidding option is reasonable?Nothing--current bid of $75 is already too high compared to the market price of $65Offer at least $95 to defeat WMUBid between $65 and $75--not to go over your head and loose shareholder valuesBid between $75 and $95--it still is a good value!

Bidding refers to the process of selling an asset or even firm where prospective purchasers submits their prices that they are willing to spend for the asset on bid and the highest bid placing person purchases the asset by wining the bidding process.The answer is "option fourth". The bid can be placed for any price falling between $75 and $95 because intrinsic value is $95. It implies that firm is undervalued in market with a price of $65 and even at $75 bid placed by another bidder. If EMU can acquire it any price below $95, it will remain good deal because EMU will be benefited from future benefits derived from acquisition. So, the $75 to $95 range is a good deal because firm is still undervalued at this price range. Other Option: (First) The bid of $75 is above $65 but still it is below the actual worth of stock which shows prospective growth and investment opportunity. (Second) The $95 bid is the maximum not the least that can be placed to defeat another bidder. (Third) Bidding between $5 to $75 is irrelevant because another bidder will surely win the deal.

Business

Finance

EMU is in a bidding war with WMU to acquire Ypsi. • Ypsi stocks are currently trading at $65/share • WMU has already made an offer of $75 · The intrinsic value of Ypsi to EMU is $95 What bidding option is reasonable? O Nothing--current bid of $75 is already too high compared to the market price of $65 Offer at least $95 to defeat WMU O Bid between $65 and $75--not to go over your head and loose shareholder values Bid between $75 and $95--it still is a good value!

EMU is in a bidding war with WMU to acquire Ypsi. • Ypsi stocks are currently trading at $65/share • WMU has already made an offer of $75 · The intrinsic value of Ypsi to EMU is $95 What bidding option is reasonable? O Nothing--current bid of $75 is already too high compared to the market price of $65 Offer at least $95 to defeat WMU O Bid between $65 and $75--not to go over your head and loose shareholder values Bid between $75 and $95--it still is a good value!

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

The current market price for common shares of Getgo Company is $15. Put options on these shares currently trade at 0.75 and come with a $10 strike price. If the stock’s market price falls to $8.45 what would be the dollar return earned on these put options? Your answer should look like this 1.2 that is not the right answer
KT corporation has announced plans to acquire MJ corporation. KT is trading for $45 per share and MJ is trading for $25 per share, with a premerger value for MJ of $3 billion dollars. If the projected synergies from the merger are $750 million, what is the maximum exchange ratio that KT could offer in a stock swap and still generate a positive NPV? It is closest to: Answer choices: A) 0.75 B) 3.30 C) 2.25 D) 1.30
A speculator can choose between (i) buying 108 shares of a stock for $50.58 per share, and (ii) buying 1080 European call options on that stock with a strike price of $42 for $3.99 per option. At maturity, what is the stock price that would make the two alternatives equally profitable? a. 1.58 O b. 42.81 O c. 47.57 d. 45.96 e. 14.18
Honeywell does not pay a dividend and its stock has a volatility of 28% and a current stock price of $67 per share. The risk-free interest is 4%. Determine the Black-Scholes value of a one-year, at-the-money call option on Honeywell's stock. (You must show me how you do this without an Excel-based option pricing model. That is, you must show your work with the formulas and Z-Tables. The value will likely be different than if you just plug into an Excel-based BSOPM). The call option's value is $. (Round to the nearest cent.)
5 Construct payoff tables or payoff diagrams on expiration to show what position in IBM puts, calls and/or underlying stock best expresses the investor's objectives described below. Assume IBM currently sells for $100. Make appropriate assumptions about the strike prices of options in each case. Ignore the cost of options. a/ An investor wants the position to be at least worth $75. Further the investor believes that the IBM stock price will go up but will at most reach $140.

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