Think of it another way. Suppose an Econ is interested in investing in Palm. He could pay $95 and get one share of Palm, or he could pay $82 and get one share of 3Com that includes 1.5 shares of Palm plus an interest in 3Com. That does not seem to be a tough decision! Why buy Palm directly when you can get more shares for less money by buying 3Com, plus get a stake in another company thrown in for free? This was a colossal violation of the law of one price. In fact it was so colossal that it was widely publicized in the popular press. Nevertheless, the value of the 3Com stub remained negative
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