11. You are examining the common stocks of two closely related companies, company ABC, whose goal is

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11. You are examining the common stocks of two closely related companies, company ABC, whose goal is to merge with another company, company XYZ. You have astrong expectation that the deal will go through and notice that ABC’s stock is relatively overvalued and XYZ’s stock is relatively undervalued. What would be an appropriate investment strategy to follow so that you could profit from both companies’ actions (assuming that you were correct in your expectations)? Would you change your strategy if you had moderate (conservative) expectations about the deal?

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