FINE 434 Lecture Notes - Lecture 10: Risk Arbitrage, Real Options Valuation, Short Squeeze
Document Summary
Real option synergies depend on some triggering event to produce a payoff. Growth option synergies: e. g. , r&d, access to network. Exit option synergies: arise from increased flexibility in altering investment strategies. Valuation of synergies in place happens with dcf method: (cid:1848)(cid:3046)(cid:3041)(cid:3032)(cid:3045)(cid:3034)(cid:3036)(cid:3032)(cid:3046) (cid:3036)(cid:3041) (cid:3043)(cid:3039)(cid:3028)(cid:3030)(cid:3032)= (cid:1829)(cid:1832)(cid:3047) (cid:4666)(cid:883)+(cid:4667)(cid:3047) Use a terminal value to reflect extended synergy life: (cid:1848)=(cid:1829)(cid:1832)(cid:4666)(cid:883)+(cid:1859) (cid:4667) Apply rigorous analysis and adopt a critical attitude. The selling of a security that the seller does not own, or any sale completed by the delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock at a lower price than the price at which they sold short. This is an advanced trading strategy, with many unique risks and pitfalls. Novice investors are advised to avoid short sales. Short sellers tend to be highly informed (i. e. , they are capable of identifying overvalued stocks).
