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Merger arbitrage, also known as risk arbitrage, is a hedge fund strategy that seeks to profit from stock price movements following the announcement of a merger. It is an absolute return strategy, aiming for profits regardless of overall market trends. This strategy has historical roots, with Benjamin Graham discussing it in his 1949 book, "The Intelligent Investor." The video tutorial covers the mechanics of merger arbitrage, distinguishing between cash and share-for-share deals, and outlines associated risks. It concludes by examining the historical returns for merger arbitrageurs, noting that the acquiring company typically bids above the target company's unaffected share price.