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Alpha Inc., has just announced that it will be acquiring Bravo Inc., for $25/share in...

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Finance

  1. Alpha Inc., has just announced that it will be acquiring Bravo Inc., for $25/share in an all- cash deal. On the day of the announcement, Alphas stock price declined from $42/share to $40/share, while that of Bravo Inc. increased from $12/share to $22/share. Which of the following can be inferred based on this information?

  1. On the day of the announcement, the arbitrage discount is $3/share
  2. On the day of the announcement, the arbitrage discount is $13/share
  3. The acquisition premium in the deal is 83.33%

  1. I only
  2. II only
  3. I and III
  4. II and III
  5. III only

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