Target corp has a current share price of 30 analysts, Ask an Expert

Finance

Target Corp has a current share price of $30. Analysts forecast annual earnings of $2.50 per share for the foreseeable future and a cost of equity of 10%. There are rumours that Target may be taken over by a large retail company, which if true, would expect to increase the share price to $40.

What is the market’s current perception of the likelihood of the merger?

What should a market maker set her ask price at if she believes there is a 2% chance that she will face an informed trader?

How should she set her bid price?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92855320

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