The Bear’s shareholders are bound to be crying day and night. Last year it’s worth 170 dollars apiece. Even the day before the collapse was claimed, it’s worth 40 dollars apiece. And, the book value of Bear Stearns is still more than 80 dollars a share! But why J.P. Morgan could buy Bear on such an incredible price? The result is ‘liquidity’. For instance, you have 1kg gold in knapsack, it’s great. But unfortunately you’re in desert. There is no way you can find to exchange the gold for your needs. The gold will be the most illiquid assets when you crawl on the desert, it’s useless. You also can explain it under ‘supply and demand’ theory.
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