Why didn't relative path work on Red Hat Enterprise Linux 5?

Issue

• Why didn't relative path work on Red Hat Enterprise Linux?
• It turned out the symlink from /usr/bin/gunzip to /bin/gunzip is broken.  The link is there but shows as red (broken). However, /bin/gunzip is present and works as expected when called directly. Here is an example of such issue:

[root@ser ~]# cd /etc
[root@ser etc]# pwd
/etc
[root@ser etc]# ls ../bin/
ls: ../bin/: No such file or directory