On December 4, 1998, the date of the UBID IPO, per-share price of UBID was closed at $48, and MALL's stock price was $26.25. Calculate the market value of the fraction of UBID share (which is 0.715 given in the case study) owned by one share of MALL on December 4, 1998.

Is the difference between the per-share price of MALL and the fraction of UBID owned by one share of MALL positive or negative? Is there a mispricing of UBID share relative to MALL?

If so, what would you do to exploit this mispricing?

Answer rating: 100% (QA)

To calculate the market value of the fraction of UBID share owned by one share of MALL we can multip... View the full answer