INVESTMENT OUTLOOK: HOW TO GET AHEAD : LEARNING THE ROPES : A POP QUIZ : How Well Do You Remember the Major Financial Developments of 1988?
Which groups of mutual funds performed best this year? What rights did you gain when Congress passed a Taxpayer Bill of Rights? Which real estate markets in California posted the highest price increases?
These are questions that keen investors can answer--if they were paying attention to major investment news in 1988.
Here’s a quick quiz to test your recall of some of the year’s major money events. If you score 12 points or better, out of a possible 16, consider yourself an investment whiz. Between 6 and 11 points, you are an informed investor. Less than 6, you probably don’t pay much attention to personal finance news. Good luck.
1. Home prices shot up all over the country in 1988, but particularly in California. What metropolitan area in the state now has the highest median price of single-family homes, according to the California Assn. of Realtors? (1 point)
A. Los Angeles.
B. Orange County.
C. San Diego.
D. San Francisco.
2. Nearly all groups of mutual funds have posted gains so far in 1988. Which mutual fund group is still posting a loss for the year? (1 point)
A. Fixed-income funds.
B. Gold funds.
C. International funds.
D. Small company growth funds.
3. Congress passed a Taxpayer Bill of Rights this year that will give greater protection to taxpayers in dealing with the Internal Revenue Service. What rights will you have under the bill? (1 point)
A. You can collect damages if a court rules that an IRS collection agent recklessly or intentionally disregarded the tax code.
B. The IRS must give you 30 days advance notice, instead of 10 days, before seizing your property or wages.
C. You may have a qualified lawyer, accountant or enrolled agent represent you at an audit.
D. All of the above.
E. None of the above.
4. What were the highs so far in 1988 for each of the following items, based on daily market closes? (1 point each if within 10%, three points total)
A. Dow Jones industrial average.
B. Gold (Comex spot contract price, in troy ounces).
C. Silver (Comex spot contract price, in troy ounces).
5. What are the current rates for the following? (1 point each if within one percentage point, 3 points total)
A. Bank prime rate
B. Federal Reserve discount rate
C. Six-month rate on Series EE savings bonds.
6. Tax-free municipal bonds were popular this year. Why? (1 point)
A. Their yields were relatively attractive compared to taxable investments such as Treasury securities.
B. Tax reform reduced the supply of muni bonds.
C. Tax changes reduced the attractiveness of competing tax-advantaged investments such as individual retirement accounts.
D. All of the above.
E. None of the above.
7. Fraud among financial planners gained new attention in 1988 when the North American Securities Administrators Assn. said 22,000 investors lost $400 million to planner fraud between mid-1986 and mid-1988. How can you reduce your chances of being taken by unscrupulous planners? (1 point)
A. Only use planners who handle your money personally, instead of through intermediaries.
B. Don’t use planners who take commissions.
C. Avoid planners who guarantee their investment results.
D. All of the above.
E. None of the above.
8. Investors looking for a play in real estate found that real estate investment trusts were an attractive alternative this year. What is true about REITs? (1 point)
A. They generally require minimum investments of at least $5,000.
B. Shares of REITs are usually traded on stock exchanges or over the counter.
C. REITs are taxed at both the corporate level and at the shareholder level.
D. All of the above.
E. None of the above.
9. Savings bonds will become more attractive, thanks to a provision in a tax bill signed by President Reagan this year. The provision makes the bonds exempt from federal income tax, beginning in 1990, if they are used for a specific purpose. What is that purpose? (1 point)
A. Purchase of a first home.
B. College tuition.
C. Emergency medical expenses.
D. None of the above.
10. Many investors searching nationwide for the highest-yielding certificates of deposit found this year that they didn’t necessarily have to buy them from struggling banks and savings and loans in Texas. Which region emerged as having several institutions also offering among the highest-yielding CDs? (1 point)
A. Northeast
B. Pacific Northwest
C. Midwest
D. Southeast
11. In the past two years Congress and the Internal Revenue Service have enacted new rules governing popular 401(k) company savings plans. What changes were made? (1 point)
A. New rules were written to make it less attractive to withdraw money from these plans.
B. Annual limits on employee contributions were increased.
C. Investors were prohibited from having a 401(k) if they also have individual retirement accounts.
D. All of the above.
E. None of the above.
12. Gold prices were sluggish this year, surprising many who thought they would take off following last October’s stock market crash. What has been blamed for gold’s sluggish performance? (1 point)
A. Japanese and Taiwanese investors did not buy as much as expected.
B. Falling oil prices prompted some Middle Eastern investors to sell gold.
C. New gold deposits were discovered around the world.
D. All of the above.
E. None of the above.
Quiz Answers
1. B
2. B
3. D
4. A 2,183.50
B $483.90
C $7.99
5. A Bank prime rate: 10.5%
B Federal reserve discount rate: 6.5%
C Six-month rate on Series EE savings bonds: 7.35%
6. D
7. C
8. B
9. B
10. A
11. A
12. D
