Suppose you are a merger arbitrage trader, your desk has imposed a dollar return minimum such that you cannot invest in a deal unless you can potentially earn $200,000 per deal (assume no expectation of a higher counter-offer arising prior to the deal closure). a) If there is 2.7% left in the spread if you invest in the deal today, what investment size (position size in dollars) must you put on at minimum to achieve this minimum per deal dollar return? [10 marks] b) For this same deal, suppose the desk's risk limits also include that you cannot invest more than 1 day's volume in the target stock (based on average daily volumes prior to the deal announcement). The stock trades at $25/share. Prior volumes per day averaged approximately 150,000 shares trading per day. Can you invest in this deal at your minimum size and stay within your risk limits? Discuss. [10 marks] c) Why is this liquidity limit imposed? Discuss. [10 marks]