Question
WeWork announced last week that it will go public via a SPAC (through a merger with BowX Acquisition Corp), in a deal that currently values
WeWork announced last week that it will go public via a SPAC (through a merger with BowX Acquisition Corp), in a deal that currently values WeWork at $9 billion.
You have an opportunity to buy securities A, B, and F today, on April 01, 2021 (from a reputable investment bank, which will pay up). The per share payoffs of these are as follows:
One share of security A will pay you $61 in one year, if WeWork is public by April 01, 2022 and valued at $9 billion or higher on April 01, 2022 (and its pays nothing otherwise).
One share of security B will pay you $305 in one year, if WeWork is public by April 01, 2022 and valued at strictly less than $9 billion on April 01, 2022 (and it pays nothing otherwise).
One share of security F will pay you $610 on April 01, 2022, if -- and only if --WeWork does not go public by April 01, 2022.
The (per share) prices of these securities are: $20 for security A, $100 for security B, and $200 for security F. The risk-free rate is 1%.
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