Question: Question 2 (8 marks) Sleecy Chicken and McBuckets have identical assets that generate identical cash flows. Sleecy Chicken is an all-equity firm with 20 million

Question 2 (8 marks) Sleecy Chicken and McBuckets have identical assets

Question 2 (8 marks) Sleecy Chicken and McBuckets have identical assets that generate identical cash flows. Sleecy Chicken is an all-equity firm with 20 million shares outstanding trading at a price of $10 per share. McBuckets has 5 million shares outstanding trading at a share price of $26. McBuckets also has debt to a value of $50 million. Assuming perfect capital markets, is there an arbitrage opportunity? If so, show explicitly how to exploit this opportunity

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