Loki, Inc., and Thor, Inc., have entered into a stock swap merger agreement whereby Loki will pay a 40% premium over Thors premerger price. If Thors premerger price per share was $40 and Lokis was $50, what exchange ratio will Loki need to offer?

a.

10%

b.

11%

c.

12%

d.

13%

e.

16%