======================== THE MOTLEY FOOL ========================
                        INVESTING  BASICS
                      Tuesday, October 16, 2001
benjamin.rogers@enron.com
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IN THIS ISSUE
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- Q&A: What Is a Hostile Takeover?

- Q&A: Is a Strong Dollar Good or Bad for Stocks?

- LESSON: The High Cost of Smoking

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SPONSORED BY: MBNA
MBNA offers a preferred yield of 5.11% on 5-year CDs for
Fools. Make your savings work for you with the security of
FDIC-Insurance up to $100,000 per depositor. Other terms available.
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YOUR QUESTIONS ANSWERED


Q. JUST WHAT IS A HOSTILE TAKEOVER?

A. Well, a friendly takeover involves one company agreeing to be
bought by another. Managers from each firm will typically meet
with each other and freely share information about themselves.
As you might imagine, in a hostile takeover, the acquisition
target is not too thrilled or cooperative.

In a hostile takeover, a would-be acquirer typically sees some
strategic value in another company. It may make friendly
overtures and be rebuffed. If so, it may then move on to dealing
directly with the target's shareholders, by offering to buy
their shares from them for either a certain amount in cash, or
an exchange of stock. If enough shareholders respond, the
acquirer can gain control. In order to entice shareholders, the
offer will certainly be for a price significantly higher than
the target's current stock price. Note that companies whose
share prices have slumped are extra-vulnerable to takeovers.

Some high-profile hostile takeover bids have included IBM for
Lotus, Johnson & Johnson for Cordis, and Hilton for ITT.

For more info on the basics of investing, get on over to our
Fool's School area.
http://www.fool.com/m.asp?i=518562


Q. IS A STRONG DOLLAR GOOD OR BAD FOR STOCKS?

A. A strong dollar can cause trouble for companies with
extensive international operations, such as Procter & Gamble or
McDonald's. That's because they'll get fewer dollars for their
rubles and pesos and francs when they exchange currency -- and
fewer dollars means lower earnings.

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THIS WEEK'S LESSON

THE HIGH COST OF SMOKING
It might seem strange to see an article on quitting smoking in a
financial feature. But in many ways, smoking is a very financial enterprise.

For example, companies obviously profit from the tobacco business.
We're also used to hearing about all the health risks associated with
smoking -- such as the fact that smoking accounts for at least
30 percent of all cancer deaths (according to the American
Cancer Society, at cancer.org). The Centers for Disease Control
and Prevention estimate that health care expenditures caused
directly by smoking totaled $50 billion in 1993, $10 billion
paid by Medicare.
http://www.lnksrv.com/m.asp?i=518563

A more Foolish way to address the cost of smoking, though, is to
examine its immediate price tag. Imagine that you're 35 years old,
you smoke one pack a day, and each pack costs you, on average, about
$3. Multiply $3 by 365 days, and you're looking at an annual cost of
$1,095. Let's see what would happen if you took this $1,095 and
invested it in the stock market, earning the historical average
return of 11 percent per year. In 30 years, you'd have $25,067.
If you invested $1,095 in the market *each year* for 30 years,
you'd end up with a whopping $241,900. Yowza.

Those who would like to quit should know that there are more
resources available to you today than ever before, most notably online.
For example, we recently opened a "Quitting Smoking" discussion
board. In less than a year, it's received roughly 8,000 posts from
people who have quit or are interested in quitting. These folks are
continually supporting and encouraging each other, and many end
their posts with this unique kind of signature: "Matt. Two days,
4 hours, 23 minutes and 19 seconds. 43 cigarettes not smoked,
saving $7.09. Life saved: 3 hours, 35 minutes." And "Helen. Eight
months,two days, 16 hours, 41 minutes and 10 seconds. 9,867 cigarettes
not smoked, saving $1,480.17. Life saved: 4 weeks, 6 days,
6 hours, 15 minutes."
http://www.fool.com/m.asp?i=518564

For more information and support on quitting smoking, visit
silkquit.com. Other resources include quitnet.org,
quit-smoking.com, and quitsmokingsupport.com.
http://www.lnksrv.com/m.asp?i=518565
http://www.lnksrv.com/m.asp?i=518566
http://www.lnksrv.com/m.asp?i=518567
http://www.lnksrv.com/m.asp?i=518568

=================================================================

SPONSORED BY: MBNA
MBNA offers a preferred yield of 5.11% on 5-year CDs for
Fools. Make your savings work for you with the security of
FDIC-Insurance up to $100,000 per depositor. Other terms available.
http://www.lnksrv.com/m.asp?i=518569

=================================================================

My Portfolio: http://www.fool.com/m.asp?i=518570
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