3. (More challenging) Palm makes handheld computers and was owned by 300m, a com- pany selling computer network systems and services. On March 2nd, 2000, 3Com sold a fraction of its stake in Palm to the general public via an initial public offering (1P0). In this transaction, called an equity carve-out, 300m retained ownership of 95 percent of the shares. 3Com announced that it would eventually spin off its remaining shares of Palm to 3Coms shareholders before the end of the year. 300m shareholders would receive about 1.5 shares of Palm for every share of 3Com that they owned. After the rst day of trading, Palm closed at $95.06 a share and 300m was trading at $81.81. (a) Can you generate a trading strategy using Palm and 300m stock that will always generate positive prots? (Hint: You need to go buy a xed number of stocks in one company and short sell a xed number of stocks in the other company so that your payoffs are never negative.) (b) What happens if you cannot short-sell companies like Palm? (c) How can you explain these prices