You are considering acquiring a firm rumored to have developed an effective gene

Question

You are considering acquiring a firm rumored to have developed an effective gene therapy for diabetes. Its value depends on this therapy. If the therapy is effective, it is worth $200 per share; otherwise it is worth no more than $40 per share. Your firm’s management and marketing strengths should increase the share price by at least 50 percent in either case. You must make an offer before the results of clinical trials are in. The owner will sell for the right price. Make an offer for the firm.

You should offer $250 so the owner will sell if the clinical trials are going well.

You should offer $225 so the owner will sell if the clinical trials are going well.

You should offer $50 so the owner will sell if the clinical trials are going badly.

You should offer $30 so the owner will sell if the clinical trials are going badly.

You should offer $250 so the owner will sell if the clinical trials are going well.

You should offer $225 so the owner will sell if the clinical trials are going well.

You should offer $50 so the owner will sell if the clinical trials are going badly.

You should offer $30 so the owner will sell if the clinical trials are going badly.

Explanation / Answer

option C is correct

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