Test Your Memory of 1990 Investing Milestones

It’s been a year many investors would rather forget. Stocks, real estate, gold and other investments tanked. You may have been better off keeping your money in a mattress.

Nonetheless, while it was a forgettable year for many investments, it wasn’t a forgettable year for investment and personal finance news. Tax law changes, bank and thrift woes, the Persian Gulf crisis, the recession--and, of course, the volatile markets--were among the developments.

Here’s a quiz to test how well you paid attention. Each answer is worth one point. If you score 15 to 20, consider yourself a well-informed investor; 7 to 14, not bad, but you could pay more attention; and 6 or less, where were you this year?

Good luck!

1. American Telephone & Telegraph introduced a new credit card that has become one of the nation’s most widely held. Which of the following is true about AT&T;’s Universal card?

A. It’s available as a Visa or MasterCard.

B. It’s popular because of its low interest rate.

C. Those using the card for purchases of at least $5,000 get a 25% discount on long-distance service.

D. All of the above.

E. None of the above.

2. Within $3, what was the closing price of crude oil per barrel (West Texas intermediate crude) on Aug. 1, the day before Iraq invaded Kuwait? Also within $3, what was the highest daily closing price for crude oil during 1990? (Two points total.)

3. In which of the following investments would you have recorded the biggest average percentage loss for all of this year?

A. Junk bond mutual funds.

B. Japanese stocks (as measured by the Nikkei stock index).

C. U.S. blue chip stocks (measured by Standard & Poor’s 500).

D. Gold.

E. The dollar (versus the Japanese yen).

4. Within 50 points, what were the year’s highest and lowest close for the Dow Jones industrial index? (Two points total.)

5. In 1990, the Japanese stock market stumbled. Which of the following markets performed even worse than Tokyo this year?

A. Hong Kong.

B. London.

C. New York.

D. Toronto.

E. None of the above.

6. After considerable prodding from the Bush Administration and others, the Federal Reserve finally cut the discount rate this year. To what level was the rate cut?

7. The deficit reduction bill that was passed this year made several notable changes in tax law. Which of the following is true of the changes?

A. Unnecessary cosmetic surgery will no longer be a deductible medical expense.

B. The maximum capital gains rate has been lowered to 15% from 28%.

C. Contributions to individual retirement accounts will no longer be deductible for all taxpayers covered by company retirement plans.

D. Tax credits for low-income housing and research and development will no longer be available in 1991.

E. None of the above.

8. What is the maximum individual income tax rate under the new tax law?

9. Within $10,000, at what income level will the new top income tax rate begin for an individual taxpayer in 1991? For taxpayers filing jointly in 1991? (Two points total.)

10. He resigned this year as portfolio manager of the Fidelity Magellan fund, the largest and one of the most successful stock mutual funds of all time. Name him.

11. The Federal Deposit Insurance Corp.’s deposit insurance fund may lose as much as $5 billion next year. Which of the following is true as a result of the FDIC’s financial woes?

A. Banks and thrifts are going to pay higher insurance premiums.

B. Savers are expected to pay higher fees for savings and checking accounts.

C. The Treasury Department has recommended that deposit insurance be reformed.

D. All of the above.

E. None of the above.

12. Bank and thrift failures continued to grow in 1990. Which of the following is true under current federal policy governing bank and S&L; failures?

A. The Federal Deposit Insurance Corp. is now responsible for insuring deposits of thrifts as well as banks.

B. Institutions that acquire failed banks and thrifts are not allowed to change the interest rates paid on the failed institution’s certificates of deposit.

C. Savers in failed institutions with deposits that exceed the $100,000 limit on federal deposit insurance cannot be reimbursed for those uninsured deposits.

D. Savers will be assessed a surcharge for helping to defray the growing losses of the Federal Deposit Insurance Corp.

13. Regulators are raising increasing questions about the safety of money market mutual funds. What type of investment in money funds’ portfolios are they primarily concerned about?

A. Junk bonds.

B. Certificates of deposit.

C. Insurance annuity contracts.

D. Commercial paper.

E. None of the above.

14. The following individuals were part of investment and finance news during 1990. For each person, name the organization or agency that he heads. (Four points total.)

A. Timothy Ryan.

B. Fred T. Goldberg Jr.

C. Richard C. Breeden.

D. L. William Seidman.

QUIZ ANSWERS

These are the answers to the Personal Finance quiz from D4. (Total points in parentheses)

1. A (1)

2. $21.55, $40.40 (2)

3. B (1)

4. High: 2999.75; Low: 2365.10 (2)

5. E (1)

6. 6.5% (1)

7. A (1)

8. 31% (1)

9. $49,200 for individuals; $82,050 for taxpayers filing jointly (2)

10. Peter Lynch (1)

11. D (1)

12. A (1)

13. D (1)

14. Office of Thrift Supervision; Internal Revenue Service; Securities and Exchange Commission; Federal Deposit Insurance Corp. or Resolution Trust Corp. (4)