Suppose that the price of the target firm 43 is after the announcement. The acquirer's share price is 74 after the announcement, and it is 82 on the deal completion date. The acquirer offers to exchange 0.679 shares of the acquirer for each share of the target at the completion of the deal. Compute the return for a merger arbitrageur assuming that the deal is successful. The answer should be given_in decimal form with three decimals. For example, write 0.105 instead of 10.5 or 10.5 % when the correct answer is 10.5 %.

Suppose that the price of the target firm 43 is after the announcement. The acquirer's share price is 74 after the announcement, and it is 82 on the deal completion date. The acquirer offers to exchange 0.679 shares of the acquirer for each share of the target at the completion of the deal. Compute the return for a merger arbitrageur assuming that the deal is successful. The answer should be given_in decimal form with three decimals. For example, write 0.105 instead of 10.5 or 10.5 % when the correct answer is 10.5 %.

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

See similar textbooks

Similar questions

Which of the following statements regarding merger deals is (are) correct? Choose all correct answer(s) On average, the price of the target increases substantially, while the price of the bidder does not increase by much. If the premium paid by the bidder exceeds the expected additional value to be created through the merger, the bidder's share price is likely to drop on the announcement of the bid. A bidder can often acquire a public-listed company for less than its current market value. Synergies are by far the most common justification that bidders give for the premium they pay for a target.
V3. Which of the following statements about IPO is correct? O In a market without agency problem, Dutch auction is the worst among the three IPO methods in terms of finding out the best reservation price of the IPO shares • In a firm commitment cash offer, the underwriter would buy the whole issue from the issuer, and then sell the issue to the market. O Best efforts cash offer is the most popular IPO method in the US market. • In the best efforts cash offer, a firm would have to continue the issuance even if the demand does not meet their expectation.
The database is mentioned in the attachment:Ques) Draw a profit diagram for an investor in a call option with an exercise price of 64 that expires in March and explain the diagram. Undertake the same analysis for the writer of the call. Comment on the contention that options are a zero sum game for the writer and investor in options.
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
Question III: In the following, suppose that neither stock pays a dividend. (a) Suppose you have a call option that permits you to receive one share of Apple by giving up one share of AOL. In what circumstance might you early-exercise this call? (b) Suppose you have a put option that permits you to give up one share of Apple, receiving one share of AOL. In what circumstance might you early-exercise this put? Would there be a loss from not early-exercising if Apple had a zero stock price? (c) Now suppose that Apple is expected to pay a dividend. Which of the above answers will change? Why?
Loki, Inc. and Thor, Inc. have entered into a stock-swap merger agreement whereby Loki will pay a 38% premium over Thor's pre-merger price. If Thor's pre-merger price per share was $40 and Loki's was $52, what exchange ratio will Loki need to offer? The ratio should be shares of Loki for every share of Thor. (Round to two decimal places.) C
FÐI may involve mergers with and acquisitions of existing foreign businesses. Select one: O True O False From the perspective of the writer of a put option written on C52,500. it the strike price is $1.25/e, and the option premium is $2,625, at what exchange rate do you start to lose money? Select one: O a $1.2/c O b $1.20/€ O c. S1.30/€ O d $1.52/e
1.) The option is currently a.) In-the-money b.) At-the-money c.) Out-the-money 2.) In/At/Out- the money by _____ pesos. 3.) What is the Intrinsic Value
aaaaIkkkkk
The market maker offers the following bids and asks with respective depths: Price Depth Bid 95 Bid 98 600 Bid 100 Ask 101 200 Ask 103 1000 1200 700 Ask 106 400 If you submit a market sell order with 1,771 shares, what's your weighted average execution price? Enter a number with two decimal points.
Let's say I decide to sell 1 call option through an account, but this account will only let me do this if you I already own the stock (a “covered call”), so I buy 500 shares of Company A and then proceed to sell a call option on Company Say this short call option expires in-the-money. What does in-the-money mean in this context? What will I have to do as the seller of this call option if the option expires in-the-money? And what about if it expires out-of-the-money?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS