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Technology Stocks : INPR - Inprise to Borland (BORL)
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To: Carolyn who wrote (4421)2/9/2000 1:01:00 PM
From: Dennis Nicks   of 5102
 
Carolyn, an arbitrage position is very common for institutions. The short position in CORL is backed by a long position in INPR. There is a set exchange between the two (0.747), so essentially by buying 1 share of INPR stock and shorting 0.747 shares of CORL, you essentially have no net position in the two companies. This means you get to keep the difference. I just figured it out and an arbitrage position is worth $1.43 per share of INPR.

The risk in this position is that the deal with fall through. Since there was very little premium paid for INPR, I don't think you'd see a big impact in either of the stock prices if the deal did fall through.

Dennis
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