\begin{tabular}{|c|c|c|c|c|} \hline \\ \hline Basis: & & & & \\ \hline \# of Vodafone shares per Mannesman share & 53.7 & & 1. Receive 53.7 Vodafone shares & \\ \hline & & Suckess & 2. Proceeds from short-sell: & \\ \hline \multicolumn{2}{|l|}{ On Dec. 17th } & & \multicolumn{2}{|c|}{ - risk free rate: 5.5% over, say, 3 mos. } \\ \hline \multirow{2}{*}{\multicolumn{5}{|c|}{1.Buy1Mannesmanshare(146.8/234)2.Short-sellBasisVodafoneshares(3.11@,167total)}} \\ \hline & & & & \\ \hline & & \multirow[t]{2}{*}{ Falkure } & \multicolumn{2}{|c|}{ 1. Hold1 Mannesman share@Oct.21st price } \\ \hline & & & \multicolumn{2}{|c|}{ 2. Pay back Basis Vodafone shares@oct.21st price } \\ \hline & & & \multicolumn{2}{|c|}{ 3. Proceeds from short-sell (same as above) } \\ \hline & & & & \\ \hline \multicolumn{5}{|l|}{ Risk spread (in f ): } \\ \hline Basis Vodafone shares & & & \multicolumn{2}{|c|}{ Prob. Success 169.3+ Prob. Failure 118} \\ \hline \multirow[t]{4}{*}{ Mannesman share } & & = & \multicolumn{2}{|c|}{(1+5.5%).25} \\ \hline & & & & \\ \hline & & & Prob. Success 169.3+(1 Prob. Success )118 & \\ \hline & & & \multicolumn{2}{|c|}{(1+5.5%).25} \\ \hline \end{tabular}