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What is the announced buying price

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Firm A (whose shares were trading at $10 per share at close yesterday) makes an offer (at 9 pm) to buy shares in Firm B (whose shares were trading at $5 per share at close yesterday). What is the announced buying price?

The offer is an all-cash deal, with a 15% premium over the last trading price. Tomorrow morning at first trade (9:30 am) shares in Firm B are trading at $5.50 per share. Does this represent an arbitrage opportunity? What is the max you can earn using your strategy and $100 dollars of capital (no more borrowing allowed)?

Reference no: EM133073623

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