Hi Sofia,
Thanks for the question. I think this is something that confuses many people. Unless the question specifies otherwise, we always assume that the shares are bought at the price they have after the announcement.
This is not really an assumption. Assume we are the firm. If we offer a lower price, no one will buy because they know they can wait and get more value. If we offer more, then everyone wants to buy because we are offering too much. Therefore, the buying price must be equal to the price after the announcement.
In the exercise from the slides, I assumed a price of buying lower than the post-announcement price to make the exercise simpler.
Thanks for the question. I think this is something that confuses many people. Unless the question specifies otherwise, we always assume that the shares are bought at the price they have after the announcement.
This is not really an assumption. Assume we are the firm. If we offer a lower price, no one will buy because they know they can wait and get more value. If we offer more, then everyone wants to buy because we are offering too much. Therefore, the buying price must be equal to the price after the announcement.
In the exercise from the slides, I assumed a price of buying lower than the post-announcement price to make the exercise simpler.