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                   I N V E S T I N G  B A S I C S
                     Wednesday, November 22, 2000

benjamin.rogers@enron.com
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ASK THE FOOL

This weekly e-mail offers answers to questions that perplex most
beginning and intermediate investors and throws in an
investing-related lesson, as well. Enjoy!

-- What causes mortgage rates to rise and fall?

-- A. They fluctuate along with other interest rates. Interest
rates are affected chiefly by inflation and the market for debt
(notes, bills, and bonds, among other instruments). With
inflation extremely low in recent years, we've enjoyed low
interest rates. But if signs of inflation begin to pop up, it's
expected that the Federal Reserve, led by Alan Greenspan, will
hike up short-term interest rates via an adjustment in the rate
of interest on "federal funds." The "fed funds" rate is the rate
of interest a bank can charge another bank for use of its excess
money. The Fed can also change the "discount rate," or the rate
paid by a bank to borrow short-term funds from the Fed. The
prime rate and other rates (such as mortgage rates) are based
primarily on these two interest rates.

The Fed raises these interest rates when the economy appears to
be growing too briskly, which can spur inflation. When the
economy is sluggish, it might cut these rates in order to give
American enterprise a boost. Lower rates give companies and
people (including house-shoppers) an incentive to borrow money.
However, remember that the money markets themselves (basic
supply and demand for money at each price point) exert the
biggest influence over interest rates, though the Fed is a big
influence on market expectations.

-- Q. Where online can I access earnings reports that companies
file with the SEC?

-- A. Many Web sites, such as ours, include access to these
filings in their stock data offerings. But you can also go right
to the source at sec.gov or freeEdgar.com.
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INVESTING BASICS - GATHERING COMPANY INFORMATION

You're intrigued by Wookie Cookies Inc. (ticker: CHEWY) and
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Tell them you'd like to receive the most recent annual report,
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The annual report will probably feature glossy photos of smiling
customers (or assorted alien life forms) chomping on cookies.
But look to the back of the report where the numbers will tell
you the real story about the business. There are three main
financial statements there. The income statement shows the
company's sales and profits. The balance sheet lists assets and
liabilities, such as cash, inventories and debt. The statement
of cash flows reveals where cash is coming from and going to.

These statements also appear in the 10-Q and 10-K reports. The
10-K is issued once a year, along with the annual report, and
10-Qs are issued thrice a year, at the end of the intervening
quarters. The 10-Q summarizes quarterly performance, while the
10-K features a lengthy discussion of the firm's operations and
challenges.

Financial statements reveal how quickly sales are growing, how
the company is financing its growth, how much profit it's
making, and much more. Pay attention to trends, to see if the
firm's financial health is improving or declining. Compare the
company with its industry peers, to see how it stacks up.

Remember that you can improve your chances for success if you're
actually a consumer of Wookie Cookies and are familiar with the
company's offerings. Also, talk about the business with other
investors, perhaps in an investment club.

Don't neglect online resources. Most company Web sites feature
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IN THE SPOTLIGHT

-- Fool writers reveal how they go about researching companies.
http://www.fool.com/m.asp?i=207904

-- Look up the best interest rates for mortgages, car loans, and
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-- Struggling with credit card debt? We've got a bunch of tips
to help you dig out.
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A NOTE FROM THE AUTHOR(

I hope you're finding this product useful. The content
originally appeared as part of our nationally syndicated
newspaper feature (which I also prepare). Consider giving your
local editor a jingle and suggesting that they think about
carrying the Fool.
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Selena Maranjian
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