Merger Arbitrage Strategy

This problem tests your understanding of a classic event driven investing strategy, where an investor evaluates a pending acquisition and the market price of the target company against the announced deal terms. It matters in investment banking interviews because it checks whether you understand how corporate events create pricing gaps, how investors think about deal certainty and market inefficiencies, and why transaction-driven opportunities can attract specialized capital. Candidates should be able to explain the logic behind the trade, the sources of uncertainty, and the risks that can affect whether the expected return is realized.