see for yourself

http://finance.google.com/finance?q=yahoo

What this stock price says to me is that investors are betting that this story, even if it's correct, is not the last word, and that Microsoft (or someone) will eventually get them.

Is it possible though, that the stock prices went up as a sign of investor relief? I'm not sure all stockholders were too happy with the deal.

If Yahoo! does reject the offer, their stock price should, were the market completely rational, fall a lot. Back to what it was before Microsoft made the offer in the first place.

Yahoo's the same company it was two weeks ago; the stock was just worth more since MS was offering a premium.

The other possibility is that investors are not completely rational.

Yahoo is the same company it was in November; the stock is just worth what it was then. It's the last 3 months that's been the aberration. ;-)