The Big QUIZ

Though not every little detail needs to roll off your tongue, an informed investor today should have a good sense of what’s been happening in the markets this year. Doing well on this test is a sign that you can trust yourself with your money. If you do poorly, you might want to trust a planner, broker, friend or spouse--assuming they do well on the test, of course.

*

1. In 1996, an investor would have made the most money by buying which of the below on Jan. 1 and selling Dec. 31?

a) Gold

b) Fidelity’s Magellan Fund

c) 30-year U.S. Treasury bonds

d) Mexican pesos

e) Corn futures

*

2. Rank the following blue-chip stocks for how well they did during 1996:

a) Walt Disney

b) Coca-Cola

c) Texaco

d) McDonald’s

*

3. *

4. Which of the following foreign market indexes performed best during the last year?

a) London’s FTSE-100

b) Tokyo’s Nikkei-225

c) Hong Kong’s Hang Seng

d) Sydney’s All Ordinaries

*

5. Within 30 basis points (0.3 percentage point), what was the lowest New York market closing on the yield of the 30-year Treasury bond during the year? The high?

*

5. Which of the following U.S. stock indexes performed best during 1996?

a) Nasdaq composite

b) Dow Jones industrial average

c) Russell 2,000 (small-company)

d) Wilshire 5,000 (all equities)

*

6. The fever charts track 1996 monthly closing prices for three of the following six well-known stocks: America Online, Cisco Systems, McDonnell Douglas, Philip Morris and Sears. Match the stock with its fever line.

*

7. Which timing decision would have made you the most money in 1996?

a) Buy an S&P; 500 fund Jan. 2 and hold all year

b) Buy an S&P; 500 fund July 10 and hold through rest of year

c) Buy an S&P; 500 fund Nov. 1 and hold through rest of year

d) Buy an S&P; 500 fund Jan. 2, sell it July 1, put the money in an average money market fund rest of year

*

8. The Dow Jones industrial average fell 55 points on Friday, Dec. 6, the day after Federal Reserve Board Chairman Alan Greenspan made a speech warning investors against “irrational exuberance.” Which statement is correct about how long after that it took the Dow to close at a new record high?

a) The Dow broke a new record two days later.

b) The Dow broke a new record about a week later.

c) The Dow broke a new record three weeks later.

d) The Dow has not reached a new high since Dec. 6

*

9. Which 1996 investment would have given the best return, after taxes, for someone at the 28% marginal federal tax bracket?

a) An average California municipal bond fund

b) Six-month U.S. Treasury bills

c) IBM stock, sold at end of year

d) An average one-year bank certificate of deposit

*

10. If you bought the following 1996 initial public offerings at their offer price, which one would have made you the most money by the end of the year?

a) Yahoo

b) Planet Hollywood

c) Guess

d) Donna Karan International

*

11. Two of the most memorable 1995 IPOs were two technology companies, Netscape Communications and Iomega. If you bought both stocks on Jan. 2, 1996, which stock would have made you the most money?

*

12. Rank these sector indexes by their 1996 performance.

a) Dow transportation

b) Hambrecht & Quist technology

c) Dow utilities

d) S&P; financials

*

12. All these stocks performed well above average in 1996. But which had the highest percentage price increase during the year?

a) 3Com

b) Charles Schawb

c) Sunamerica

d) General Electric

e) DuPont

f) Intel

*

Key: Give yourself two points for every correct answer. Give yourself one point if you missed no more than one stock in Nos. 2 and 11 or one part of No. 5. Also, score one point for each fever line identified correctly in No. 13. Twenty-seven is the highest score. Consider yourself a serious investor with any score over 22. For more rankings, see “Year-End Market Review” in this section.

1. b

2. b,c,a,d

3. c

4. Low was 5.92% on Jan. 3; high was 7.16% on July 5.

5. b

6. a, Philip Morris; b, America Online; c, McDonnell Douglas

7. a

8. c

9. c

10. a

11. Iomega is up over 100% during 1996; Netscape is down more than 20%.

12. d,b,a,c

13. f