Takeovers Permanently Increase Trading Volume

When one company offers its stock to buy the shares of another company, when will that show up in the trading volume of the surviving company?

Trading volume in companies involved in takeover stories typically skyrockets the moment news gets out. For example, the average daily volume in WorldCom in the six months before the company announced its proposed stock-for-stock acquisition of MCI Communications was 5.9 million shares.

On the day the story broke - Oct. 1 - WorldCom volume jumped to 69.9 million shares. But this activity reflected buying and selling of the 900 million shares of WorldCom already issued and outstanding in the market.

The deal, if and when it were consummated, would put up to 864 million additional WorldCom shares in circulation as payment to MCI shareholders.

The number of WoldCom shares outstanding would nearly double, which likely would increase the trading volume in WorldCom permanently.

Guides explain 401(k) advantages

Company 401(k) plans have become quite popular in recent years. Here are a few guides that will help you bone up on their pros and cons:

“You and Your 401(k)” (1996), by Julie Jason, Simon & Schuster ($10.00)

Concise and helpful guide to managing a 401(k), details the possible benefits and risks.

“401(k) Plan Handbook” (1997), by Julie Jason, Prentice-Hall ($79.95)

A much more intricate look at 401(k) plans that explores the various legal, administrative, and managerial issues involved.

“10 Minute Guide to 401(k) Plans” (1996) by Paul Katzeff, Alpha Books ($10.95)

A quick and easy explainer and how-to on planning a 401(k).

“Investing from Scratch: A Handbook for the Young Investor” (1996) by James Lowell. Penguin Books ($11.95)

This book address a number of investment options and includes a chapter devoted to 401 (k) plans.

“The 401(K) Book: Your Last Best Hope for Retirement Savings!” (1996) by Richard Sasanow, H. Holt & Co. ($9.95)

Good primer.