Forum Archive Index - August 2001

["G Stolwyk" <stolwyk@wave.co.nz>]

 

Thank you, Ben Malthus!

 

I'll accept your clear result!  In practice, it is theoretically possible that RBC's research division's work in the coming months could increase the overall value of the share price.

 

On the other hand, this may take longer. The number of shares will be reduced but there will be still quite a few left.

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We now move to the next stage: The RBC share price is 80 cents today and we assume that the Receiver of the CNIF partnership right now announces a decision or / and there is a simultaneous offer to buy FFS/FFSPA.

 

We also assume that RBC has not bought back any shares and that RBC still has 352 mill. shares.

 

In my report of 24 March 2001, it was accepted that a rise of 1 cent per FFS share causes the RBC price to rise approx. 1.4 cents. We assume that this holds and when we refer to FFS, we include FFSPA.    

 

 

For the purpose of this exercise, we assume that this offer is accepted and settled right now.( We therefore ignore any influences which may have an effect).

 

We assume that as a consequence, the FFS/FFSPA shareprice rises from 32 cents to 50 cents and remains frozen till settled.

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Immediately before these totally unexpected events take place, somebody with $ 160 decides to invest in either FFS @ 32 cents/share  or RBC @ 80 cents / share ( We shall ignore any transaction costs in all cases).

 

He is a trader and sells the shares he bought, immediately after FFS rises to 50 cents. 

 

Questions:

 

1. How many FFS shares can he buy? And what will be his return in % ? 

 

2. How many RBC shares can he buy? And what will be his return in % ?

 

Gerry