There are several different ways investors make money in the financial markets. One way that is not found as often in the daily headlines is risk/merger arbitrage.
This strategy attempts to profit from the narrowing of the gap in the price of a company being acquired and the acquirer's valuation of that stock in a potential takeover deal. There are several different components to the calculation that are adjusted on a daily basis. This investment strategy will be profitable if and when the deal becomes official.
