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Old 08-08-2007, 01:32 PM
Phone Booth Phone Booth is offline
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Join Date: Aug 2006
Posts: 241
Default Re: Earn 6% in the next 5 months (merger arbitrage)

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This one is as close to a done deal as you can get (in my opinion of course). I agree I am not a merger expert but am very familiar with both of these companies.

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Answer these three questions: 1) what would the price return to (on the closing date) if the deal did not materialize, 2) given those target prices and a reasonable discount rate (say 8%), what does the probability of this deal closing have to be for this investment to break even (in other words, what does the market say about the probability of this deal closing)? 3) given this market perception, why do you think the actual probability is even higher?
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