Those who took this risky arbitrage earns 25%, or annualized return of 75%!
Posted by kcchongnz > Apr 30, 2013 09:48 AM | Report Abuse X
Market inefficiency?
News broke out about the signing of the S&P for the takeover offer last night. Maximum takeover price 83.6 sen and minimum 76 sen. Completion of S&P by end of May. GO say take another 3 months to complete.
If everything concluded in the one plus three months and all investors get their money in four months, the profit of buying KHSB now at 67 sen would be between 13.4% and 24.8%, or an annualized return between 40% to 75%.
Why is there such a high risk premium for this risky arbitrage play?
Posted by fadhil53 > Aug 28, 2013 11:23 PM | Report Abuse kcchongnz can u help me on this predicament . tq
Not a good move to buy at 83 sen as the GO price is 83.6 sen. Eventually you will be given a check with 83.6 sen settlement price. You wont make any gain after taking into consideration of your opportunity cost or loss in interest from your money.
That is a problem of buying something without knowing what is happening. But never mind, take it as an inexpensive lesson learned.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Stockman
684 posts
Posted by Stockman > 2013-08-13 22:00 | Report Abuse
Agreed