Chartered Financial Analyst Level 2

Explanation

In merger arbitrage hedge fund strategies, there are two types of catalyst events:

Hard Catalyst Events: These are concrete, announced events where the outcome is more certain. Option B ("has been announced but not completed") represents a hard catalyst because the merger has been formally announced, creating a specific event with measurable risk/reward parameters.

Soft Catalyst Events: These are situations where an event is anticipated or expected but has not been formally announced. Option C ("is anticipated by investors but has not been announced") represents a soft catalyst because:

• There is no official announcement
• The investment is based on speculation and market anticipation
• The outcome is less certain and more speculative
• The catalyst is "soft" because it hasn't materialized into a concrete event

Option A ("has been completed") is not an event-driven investment at all since the event has already occurred and the opportunity for arbitrage has passed.

Therefore, option C is the correct answer as it represents a soft-catalyst event-driven investment where the catalyst is anticipated but not yet announced.