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Company AA makes a bid to take over company TT. AA bids 100M in cash for the entire company TT. TT has 1M shares outstanding.
Company AA makes a bid to take over company TT. AA bids 100M in cash for the entire company TT. TT has 1M shares outstanding. Before the announcement, TT traded at 80 per share and, after the announcement, the price jumps to 94 per share. Which of the following is true: Select one: O a. A merger arbitrage hedge fund will typically buy IT after the announcement, in this case for 94. 0 b. A merger arbitrage fund would typically buy AA, not TT C. A merger arbitrage hedge fund will typically buy TT before the announcement (in this case for 80) to profit from the jump in price d. A merger arbitrage hedge fund will typically buy TT only when the merger completion is guaranteed. O Question 5 Answer saved Marked out of 1.00 p Flag question The hedge fund has a net asset value of a billion 1,000,000,000. Over the following year, its positions earn a return of 20%, but transaction costs lower the net return to 16%. The hedge fund charges a 2% management fee and a 30% performance fee (with no hurdle rate). How large is its total fee in percentage terms? Select one: a. 6.8 % b. 2 % C. 8 % O d. 6.2 %
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