Specialing in digitalswitching system

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Reference no: EM13331644

A financial advisor at diehlinvestments identified two companies that are likely candiates fora takeover in the near future. eastern cable is a leadingmanufacturer of flexible cable system used in the constructionindustry and comswitch is a new firm specialing in digitalswitching system. eastern cable is currently trading 40 per shareand comswitch is vurrently trading 25 per trade. if the takeoversoccur the financial advisors estimates that the price of easterncable will go to 55 per share and comswitch will go to 43 pershare. at this point in time the financial advisor has identifiedcomcwitch as the higher risk alternative. assume that a clientindicated a willingness to invest a maximum of 50,000 in twocompanies. the client wants to invest at least 15,000 in easterncable and at least 10,000 in comeswitch. because of the hohger riskassociated with comswitch, the financial advisor has recommendedthat at most 25000 should invest in comswitch.

Reference no: EM13331644

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