The NFF Corporation has announced plans to acquire LE Corporation. NFF is trading for $50 per share, and LE is trading for $57 per share, implying a pre-merger value of LE of approximately $8.4 billion. If the projected synergies are $2.89 billion, what is the maximum exchange ratio NFF could offer in a stock swap and still generate a positive NPV?
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- The NFF Corporation has announced plans to acquire LE Corporation. NFF is trading for $ 25 per share, and LE is trading for $ 29 per share, implying a pre-merger value of LE of approximately $ 7.3 billion. If the projected synergies are $ 1.27 billion, what is the maximum exchange ratio NFF could offer in a stock swap and still generate a positive NPV?The NFF Corp. has announced plans to acquirer LE Corp. NFF is trading for $35 per share and LE is trading for $25 per share, implying a pre-merger value of LE of approximately $4 billion. If the projected synergies are $1 billion, what is the maximum exchange ratio NFF could offer in a stock swap and still generate a positive NPV?KT corporation has announced plans to acquire MJ corporation. KT is trading for $45 per share and MJ is trading for $25 per share, with a premerger value for MJ of $3 billion dollars. If the projected synergies from the merger are $750 million, what is the maximum exchange ratio that KT could offer in a stock swap and still generate a positive NPV? It is closest to: Answer choices: A) 0.75 B) 3.30 C) 2.25 D) 1.30
- he NFF Corporation has announced plans to acquire LE Corporation. NFF is trading for $ 64 per share, and LE is trading for $ 13 per share, implying a pre-merger value of LE of approximately $ 6.7 billion. If the projected synergies are $ 2.07 billion, what is the maximum exchange ratio NFF could offer in a stock swap and still generate a positive NPV? Question content area bottom Part 1 The maximum exchange ratio NFF could offer in a stock swap and still generate a positive NPV is enter your response here. (Round to three decimal places.)You have been asked to assess the impact of a proposed acquisition on the beta of a firm and have been provided the following information on the two firms involved in the deal: The risk-free rate is 4% and the equity risk premium is 6%. Now assume that Acquirer plans to retire all of Target’s debt and that it will be able to buy Target’s equity at the current market price. If Acquirer would like to have a levered beta of 1.35 for the combined firm after the transaction, estimate how much new debt it will need to raise to finish this acquisition.Let there exist a non-dividend-paying stock, A, which has a current price of $80. Let there exist another stock, B, which has a current price of $100. Stock B will continuously pay dividends at a dividend yield of x. A one-year European exchange call option with underlying asset A and strike asset B is sold for $5, while a one-year European exchange put option with underlying asset A and strike asset B is sold for $15. 12% is the continuously compounded, risk-free interest rate. Calculate the value of stock B's dividend yield, x.
- The price of a one-year European call option on a non-dividend-paying stock is $6. The price of a one-year European put option on the same stock is $1. The strike price for both the call and the put is $50. The stock price today is $51 and the continuously compounded risk-free rate is 6% per annum. Use the put-call parity to suggest an arbitrage strategy to earn risk-free profits. Specifically, describe the various short and long positions you need to take in the underlying assets and show all the relevant cash flows from this strategy at both origination and expiration. Use a TABLE to show all of your work.A European call that will expire in one year is currently trading for $3. Assume the risk-free rate (based on continuous compounding) is 5%, the underlying stock price is $60 and the strike price is $55. a. Is there an arbitrage opportunity? b. Describe exactly what a trader should do to take advantage of the arbitrage opportunity assuming it exists. c. Determine the present value of the profit that the trader can earn assuming you identify an arbitrage opportunity. Use at least four decimal places for those questions that require a numerical answer.Winter Corp. can invest at a fixed rate of 7.5% or at a floating rate of LIBOR+2.4%. Spring Corp. can invest at a fixed rate of 8.3% or at a floating rate of LIBOR+2.1%. Winter Corp. wants to invest at a fixed rate and Spring Corp. wants to invest at a floating rate. Design a swap that takes advantage of the corporations’ comparative advantages in investing, benefits both firms equally, and nets an intermediary 20 bps per year. What interest rates will each party pay to the intermediary? A. Winter pays 5.55%, Spring pays LIBOR B. Winter pays LIBOR; Spring pays 5.75% C. Winter pays LIBOR; Spring pays 7.95% D. Winter pays 7.50%; Spring pays LIBOR
- A European call on OPSY stock with a strike price of $22.50 is worth $1.75. Let the present value of the strike price be $22.25. A European put on the stock with identical terms is worth the same. If the price of OPSY stock is $22, the arbitrage profit that you can create today by trading the stock and other related securities is: (Answer in dollars without $)(35) (P-C Parity Arbitrage) A European Call price is C= $ 3.50, on a ZERO dividend. A similar Put price is P= $ 2.50. The stock price S= $ 51 , strike price X= S 50 , T= 1 year, and R = 2%. (a) Determine what the CALL Price SHOULD be. (b) How much should your arbitrage profit be? (c) Focusing on Real vs. Synthetic Call, specify ALL time 0 trade details. (d) At expiration in 1 year at T, show the ending details { both if S is HIGH or LOW }.You happen to be checking the newspaper and notice an arbitrage opportunity. The current stock price of Intrawest is $25 per share and the one-year risk-free interest rate is 3%. A one-year put on Intrawest with a strike price of $23 sells for $3.15, while the identical call sells for $6.13. Explain what you must do to exploit this arbitrage opportunity. (Select the best choice below.) OA. The strategy would be to sell the call option, buy the put and the stock, and borrow $22.33. The net benefit is $0.31. OB. The strategy would be to sell the call option, buy the put and the stock, and borrow $23. The net benefit is $0.31. OC. The strategy would be to sell the call option, buy the put and the stock, and borrow $22.33. The net benefit is $0.98. OD. The strategy would be to buy the call option, sell the put and the stock, and borrow $22.33. The net benefit is $0.31.