Next, said Buffett, you have to figure in the time span involved and then relate the return of the investment to other investments available to you. If you bought one share of Abbott Company at $27, there is, according to Buffett’s mathematics, a potential 6.6 percent return ($1.80/$27). If the deal is expected to close in six months, the annualized return on the investment would be 13.2 percent. Buffett would then compare the return from this risk arbitrage with other returns available to him.
