Final answer:
The exchange ratio is 0.25 shares of the acquirer's stock for every 1 share of the target's stock.
Step-by-step explanation:
The exchange ratio is a ratio that determines how many shares of the acquirer's stock will be exchanged for a certain number of shares of the target's stock. In this case, the acquirer agrees to exchange 0.5 shares of its stock for every 2 shares of the target's stock.
To calculate the exchange ratio, you divide the number of shares the acquirer is offering (0.5) by the number of shares of the target's stock (2). So, the exchange ratio would be 0.25 shares of the acquirer's stock for every 1 share of the target's stock.
Example:
If the target company has 100 shares of stock, the acquirer would exchange 0.25*100 = 25 shares of its stock for the target company's 100 shares.