The purpose of this study is to develop a valuation framework for mergers and acquisitions by explicitly incorporating the synergy effect of mergers. Based on the real options approach, we introduce the upper and lower bounds of terms for an acquirer that makes a merger profitable to both the...

In this paper, we consider a model for valuing callable financial securities when the underlying asset price dynamic is unobservable but can be partially observed by receiving a signal stochastically related to the state of the real economy. In callable securities, both the issuer and the...