Question
One activity by Investment Banks is Risk Arbitrage. Consider the following example: Company A announces that it intends to buy Company B at a price
One activity by Investment Banks is Risk Arbitrage. Consider the following example: Company A announces that it intends to buy Company B at a price of 100. Because of the potential for the transaction not to occur, Company B's stock rises from a pre-announcement price of 70 to a new price of 90. What is the typical trade that the Investment Bank will make in this case?
- A. Buy the stock of Company A and Buy the stock of Company B
- B. Buy the stock of Company A and Sell the stock of Company B
- C. Sell the stock of Company A and Sell the stock of Company B
- D. Sell the stock of Company A and Buy the stock of Company B
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Public Finance Theory And Practice
Authors: M. Marlow
1st Edition
0030969603, 978-0030969607
