Assume B is 7 ,

2. a. Company A makes an offer of $44-per-share for Company B. Immediately after the announcement shares of Company A are selling for $86 and shares of company B are selling for $(40+.1*B). The deal is expected to close in 120 days. If the deal closes, what would be the annualized return for a risk arbitrager who buys shares of Company B at $(40+.1*B)? b. Suppose instead, that Company A offers 0.5 of its shares for one of the target. Describe the trading strategy that the arbitrager should undertake and determine his annualized return if the deal closes. 2. a. Company A makes an offer of $44-per-share for Company B. Immediately after the announcement shares of Company A are selling for $86 and shares of company B are selling for $(40+.1*B). The deal is expected to close in 120 days. If the deal closes, what would be the annualized return for a risk arbitrager who buys shares of Company B at $(40+.1*B)? b. Suppose instead, that Company A offers 0.5 of its shares for one of the target. Describe the trading strategy that the arbitrager should undertake and determine his annualized return if the deal closes