Acquisition issues

Q When a company is bought by another company, does its stock price always go up?

— P.Y., Carson City, Nevada

A Not necessarily. Imagine that the acquiree has a stock price of $50 and a market value of $5 billion. If it's announced that it's being purchased for, say, $6 billion (equivalent to $60 per share), the stock price will generally rise to around $60 on the news. It's common for a company to be bought for more than its market value, perhaps because the purchaser sees value in factors such as its proprietary technology, patents or growth potential. It might also be bought at a premium due to a bidding war.

Other times, a company may be struggling, and it may end up being bought at close to its current market price.

The acquirer's stock price might jump, too, if investors see the purchase as strategically smart. If investors think the company is overpaying, its stock might sink a bit. It all depends on investor expectations and reactions to the deal. Some acquisitions turn out to be brilliant moves, while others end up regretted.

Q How can I track my portfolio online?

— C.A., Hickory, North Carolina

A Your brokerage will probably offer portfolio tracking. Otherwise, many sites, such as Finance.Yahoo. com, do so. You might click something like a “create portfolio” link, then enter the various stocks and funds you own and the prices at which you bought them. After that, you can click in any time to see the latest value of each holding, as well as your overall portfolio's value. To help you keep up with stocks on your watch list, you might create a separate portfolio for those as well.