business
140344: Dow average soars to record high
By CHET CURRIER
AP Business Writer
NEW YORK The stock market Volume on the New York Stock
kept moving ahead yesterday with a Exchange picked up to 129.48 million
late burst of buying that carried the shares from 119.20 million Tuesday.
Dow Jones industrial average to its Analysts said falling interest rates
first close ever above 1,400. have raised hopes on Wall Street for a
The widely recognized average of strong economy in 1986.
30 blue chips climbed 6.77 to 1,403.44, Interest rates have taken a tumble
extending its gain since inid-Septem- in the credit markets as of late. In
ber to more than 105 points. yesterday's trading, rates were gen-
Other, broader market measures erally mixed with small changes.
Insurance companies target college students
By SCOTT A. ALDERFER
Collegian Business Writer
As graduating University seniors approach post
collegiate life, many are becoming marketing
targets of life insurance companies.
James D. Hugo (senior-electrical engineering)
received a phone call last week from one such
company.
"She didn't say it was about insurance in partic
ular," Hugo said. "It was for financial planning
setting up some financial plan for after gradua
tion. She said she wanted to talk sometime and I
was too busy that week so I suggested that maybe
she should try back next week."
But Phil Wheat, vice president of college mar
keting for Fidelity Union Life of Dallas believes
college students should take time to examine their
financial needs before hastily deciding they are
not interested in life insurance or other types of
financial planning.
Fidelity Union Life is the leading insurance
company that markets specifically to college
students, Wheat said. While several other compa
nies talk to college students about life insurance
and financial planning, most companies do not
have a national marketing effort specifically di
rected toward college students. He said local
agents usually take the initiative themselves to
contact college students.
"Our philosophy in planning with a client is to
try to determine the individual's personal finan
cial needs," Wheat said.
He said college students' needs would include
their expected annual income after graduation,
expected lifestyle, plans to buy real estate and
plans for a family.
Wheat said a general rule in determining premi
um payments is that a person's savings should not
exceed 5 percent of a their net income, adding that
life insurance policies are considered part of their
savings.
"If a person is making $15,000 a year and taking
home about $lO,OOO of that, his insurance premi
ums should not exceed $5OO a year," Wheat said.
"We try to conservatively estimate a person's
financial situation because the last thing we want
to do is pressure someone into buying more cover
age than they need or can afford," he added.
Whether a person chooses whole life or term
insurance should depend greatly upon their finan-
Public relations:
As a business reporter, I deal with public
relations departments in large companies
very often. The PR personnel I speak to are
usually very helpful.
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Admittedly, it can sometimes be annoy
ing having to wait for a PR department to
check the appropriate sources within their
organization and call me back with my
answers. But the reporter ultimately bene
fits by dealing with one department in
particular instead of being subject to the
classic "run-around."
PR departments can occasionally seem to
be a hinderance to reporters as well as to
other departments in a company.
remained below their mid-summer
highs, but they continued to push
closer to those levels.
•
cial situation, Wheat said.
He explained that whole life insurance is appro
priate if a person is concerned with either support
ing a family in the event of his or her unexpected
death or with having collateral to back a major
loan in the future.
Wheat gave as an example someone who expects
their future total mortgage payments, both princi
pal and interest, to total about $lOO,OOO. He said the
person would want their life insurance to cover at
least- $lOO,OOO so their survivors would be able to
cover mortgage payments in the event of unex
pected death.
He noted that prospective clients would want to
cover any major future expenditures like mort
gages for both sentimental and practical reasons.
"You're going to want to cover those expenses
because you wouldn't want loved ones being stuck
with huge bills in case you die unexpectedly,"
Wheat said.
"On the other hand, if you want to take out a
large loan, the banker is going to want some
guarantee that, in case some drunk driver kills
you, he's going to get his money paid back."
Term insurance covers a person only for a
specified period of time, Wheat said.
"Probably a good name for term insurance
would be temporary insurance," he said.
Wheat said the coverage which is received for
only a specified period of time is attractive to
people investing in short term investments that
require periodic payments.
Wheat added that term insurance would be more
attractive than the long term investment of whole
life insurance for other reasons.
"If I've already got all the coverage I need for
my financial plans with my whole life policy and I
decide I'm going to have my last child, I might
only want additional coverage for another 20
years," he said.
He explained that the additional coverage of a
term policy in that specific case would cover the
welfare of the child
,incase of the insured's
accidental death as the child grows older.
Wanda Pontzer, of J. T. Matis & Associates, the
local agent for Fidelity Union, said an additional
type of insurance called universal insurance has
recently become popular. With universal cover
age, a policy holder pays into a policy for a certain
period of time for life-long coverage. The policy is
valid from the time the first premium payment is
Friend to
I ran into this potential hinderance while
researching a story last month. I spoke on
the telephone to the recruiting coordinator
for one of the largest business machine
companies in the country. He was reluctant
to give me his name because of a certain
company policy.
The policy which he explained to me
prohibited any company personnel other
than the PR department to talk to the press
without first clearing what they would say
with the PR department.
While the information I . received from
him concerned only the company's recuit
ment standards and was far from being
incriminating or scandalous, he said he
preferred that I not use his name because he
disregarded the policy by talking to me for
five minutes.
There is no doubt that this recuiting
coodinator was somewhat out of line in
disregarding his company's policy to talk to
me. On the other hand, is this policy per
haps a bit over-bearing and cumbersome
requiring the PR department to censor all
statements made to reporters?
On the other hand, some companies might
Lower rates would presumably act
to stimulate spending for construc
tion and capital equipment, giving
debt-laden consumers some help in
keeping the economy growing. At the
same time, falling rates reduce the
relative appeal of interest-bearing
investments like bonds that compete
with stocks for investors' favor.
The Dow Jones industrial average
touched 1,400 early in the session and
again at midday, pulling back each
time amid selling by some traders
who had planned in advance to do so
at that round-number level. But
stocks came on strong again just
before the close.
Wall Street also got a boost yester
day morning from International Busi
ness Machines, which said it expects
to post "some strong growth" in the
current quarter. IBM shares rose 1 / 2
to 132 3 / 4 in active trading.
Among other leading computer and
technology issues, Hewlett-Packard
gained 1 1 / 4 to 32 1 / 4 ; Texas Instrumenti
4 1 / 2 to 94 3 / 4 , and National Semiconduc
tor 1 1 / 8 to 11%.
Scientific-Atlanta added 1 to 11. The
company said it expects to report
higher earnings for the current fiscal
quarter and is likely to recommend
that directors increase the dividend
within the next 12 months.
Contributors to the Dow's advance
included McDonald's, up 1 at 70 7 / 8 and
trading at record highs; American
Express, up 1% at 47 1 / 4 , and Ameri
can Can, up 3 at 61%.
Fireman's Fund, shares of which
were recently sold to the public by
American Express, was up 7 / 8 at 30 1 / 2 .
The company declared an initial
journalists, savior to businesses and society
be advised to consider starting a public
relations department within their organiza
tion.
It is common for rvorters in telephone
interviews to encounter secretaries or peo
ple in low-level managerial positions who
will hear the term "newspaper reporter,"
and have their composure reduced to that of
an adolescent talking to someone of the
opposite sex for the first time.
Just yesterday, I called an apartment
management company to confirm some
vandalism damage statistics. I asked to
speak to the maintenance coordinator but I
was told he had already left for the day. I
told the secretary the information I sought
to confirm and she responded, "What are
you going to do with the information?" -
What did she think I was going to do with
the information? Tell their property insur
ance company they are a bad risk?
I tried not to sound too cocky and respond
ed, "Put it in the newspaper."
She replied, "Oh."
Granted, a local property management
company would not be large enough to
I: r.. 1 g i.. 1 : y: .:y I • .1: 1 9 1 . .1 ••
quarterly dividend of 7 1 / 2 cents a
share.
Allied Stores rose 2 3 to 61%. The
company declined comment on a
published report that it plans to sell
five regional shopping malls.
Advancing issues out-numbered de
clines by about 3-to-2 on the Big
made, she said
An attractive feature of universal insurance is
that the policy holder is able to borrow money
from the policy for a less-than-market interest
rate, Pontzer said. A loan taken out on the policy
would not effect the policy's ability to pay benefi
ciaries in the event of the policy holder's death
while the loan remains outstanding.
ROTC students may be contacted by other, more
specialized financial organizations because of
their military affiliation.
The Army Mutual Aid Association of Arlington,
'Va. is a non-profit independent organization which
offers life insurance and other financial services to
ROTC students at various colleges in the country.
Some of the services Walton said the organiza
tion offers Army and Air Force ROTC students
and army and air force personnel include invest
ment portfolio planning, insurance planning and
pension and benefit consultation.
The organization aids military personnel from
the time they are ROTC students in college or
cadets in a military academy through retirement
from the military service, he said.
Walton said the initial life insurance coverage
available is limited to $3,000, but additional cover
age in $3,000 increments is later offered up to a
$12,000 total.
He said that Army Mutual Aid's life insurance is
only designed to augment other life insurance
polcies that members / clients of the organization
already own or are planning to buy.
Walton said Army Mutual Aid began offering its
insurance and other benefits in a special program
at the United States Military Academy at West
Point last year.
In the program, senior cadets were offered the
first $3,000 of coverage at no charge in the fall and
a membership in the organization in the spring
before their graduation. Walton said the repsonse
was very favorable.
After its success marketing its services at West
Point, the organization targeted ROTC students at
ten military-oriented colleges this fall, offering the
same program of the first $3,000 of coverage free,
Walton said.
Army Mutual Aid plans to offer its service to
Army and Air Force ROTC students at Penn State
next fall, Walton said. He added that the Navy
Mutual Aid Association offers similar services to
Navy and Marine personnel.
Board. The exchange' s composite
index gained .24 to 111.31.
Nationwide turnover in NYSE-list
ed issues, including trades in those
stocks on regional exchanges and in
the over-the-counter market, totaled
153.20 million shares.
Standard & Poor's index of 400
Farm Credit failure
will hurt economy
By JIM DRINKARD
Associated Press Writer
WASHINGTON, D.C. Failure
of the $7O billion Farm Credit
System would be a hammer blow
to the U.S. economy, driving up
mortgage interest rates, endan
gering more than 2,000 banks and
prompting a wave of farm foreclo
sures, according to a system-spon
sored economic study.
The system, which is lobbying
the federal government for a $6
billion bailout, emphasized it does
not expect such a default on its
securities, but that it conducted
the study to demonstrate the se
riousness of its problems.
Gene Swackhamer, president of
the Farm Credit Banks of Balti
more, said the results of the analy
sis by Chase Econometrics
"surely would help" in the sys
tem's efforts to win support for
federal financial aid.
Should the 37-bank system fail to
meet payments on the bonds it
issues to raise loan money, the
study said, "this unprecedented
default would further depress ag
riculture, severely disrupt finan
cial markets and seriously weaken
an already fragile U.S. economy."
If a default were to occur in 1986,
the analysts said:
• Loans to an additional 88,000
farmers would be foreclosed.
• Commercial banks, which are
among the primary purchasers of
system bons, would lose $2B bil
lion. That would push the number
of agricultural banks now on the
government's "troubled" list from
its current 141 to 2,300.
make setting up a PR department worth its
while. But I've encountered similar situa
tions in which department after department
passes the buck until one department finally
attempts to answer my questions.
I don't claim to be a public relations
expert; but I am familiar with some basics
of public relations theory and with some of
the concerns and attitudes of public rela
tions practitioners.
Public relations departments are not the
flackers of the past throwing out as much
publicity as possible, not always with re
gard for accuracy, and hoping some of it
hits the news media.
Public relations has also progressed from
the public information school of thought of
the early 20th century. PR departments are
no longer concerned soley with disseminat
ing accurate or timely information to the
media, trying to avoid negative public opin
ion when a crisis arises involving the orga
nization.
Most public relations practice has pra
gressed to a two-way relationship of com
munication not only between the
The Daily Collegian
Thursday, Nov. 7, 1985
industrials rose .39 to 214.03, and
S & P's 500-stock compbsite index
was up .39 at 192.76.
The NASDAQ composite index for
the over-the-counter market picked
up 1.49 to 296.74. At the American
Stock Exchange, the market value
index closed at 231.20, up .96.
• The gross national product
would drop by $76 billion over two
years, while the federal budget
deficit would increase by $B5 bil
lion in the same period.
One surprising result of the stu
dy, Swackhamer said, was the
effect of a default on home mort
gages.
The Farm Credit System, a pri
vate, cooperatively owned entity,
nonetheless enjoys an investor
perception that its bonds are fed
erally guaranteed, even though
they are not. That perception,
known as "agency status," also
extends to other quasi-governmen
tal financial systems such as the
Federal National Mortgage Asso
ciation, the Federal Home Loan
Mortgage Corp. and the Federal
Home Loan Bank System.
If the government does not live
up to its perceived obligations to
back up the Farm Credit System,
the perceived risk in other "agen
cy" bonds would increase and
drive up their cost of borrowing.
Home mortgages would rise from
about 12.5 percent interest to 15
percent or more, the analysis said.
As farm credit dries up, interest
rates to farmers would almost
immediately rise by 3.5 to 4.5
percentage points, the study
added. Values of farm land would
continue their downward spiral,
dropping another 20 percent as a
direct result of a default, it said.
Swackhamer said the study was
ordered after initial admissions of
severe financial problems in the
system were met with skepticism
in the Reagan administration and
in Congress.
organization and the general public, but
also among departments within the organi-
With the two-way theory of PR, organiza
tions not only disperse information to the
public, they also survey public opinion of
their organization to try to respond to the
public's opinion of them.
Although many organizations are not able
to start a PR department because of their
size, some of these organizations might
want to consider at least designating some
one to handle the responsibilities of estab
lishing a two-way relationship between
their organization and the public with which.
they must deal.
A competent public relations department
make a reporter's job easier. It is also a
step in the direction of improving commu
nication in our interrelated society at a time
when alienation within our society is a
common and•valid complaint.
Scott Alerderfer is a senior majoring in
journalism and a business writer for The
Daily Collegian.
New computer analysis firm opens
By LAUREN YOUNG
Collegian Staff Writer
University President Bryce Jordan, calling the countries worldwide, including major companies
relationships between universities and private such as Du Pont, Penn State and other universi
enterprises a "new ball game" yesterday, ded- ties, including most Ivy League schools, Thomas
icated the opening of Minitab, Inc., a new comput- Ryan said.
er statistical analysis corporation developed in Minitab is a "high-tech spinoff" of the Ben
conjunction with the University. Franklin Challenge Grant Program, Thomas
University statistics professors Thomas A. Ryan - Ryan said. The program was designed to create
and Barbara F. Ryan, with Wisonsin businessman jobs for high-tech industries through the joint
Brian Joiner, collaborated with the University to efforts of industrial and academic organizations.
create Minitab Data Analysis Software in 1972. "Specifically, what the Ben Franklin Project did
The combined effort developed an easy-to-use was to provide space for us on campus for two
statistical computing system to help University years while the Minitab facility was under con
students with introductory statistical courses. struction," Thomas Ryan said.
Soon after it started, Minitab, Inc., 3081 Enter- The University also allowed Minitab to use its
prise Drive, began to receive requests for statisti- mail and telephone systems.
cal analysis systems from other colleges and Minitab started as a project at the University
universities and from businesses and government and later became a company, Thomas Ryan said.
agencies. "We started as an academic project, then it
Jordan said Minitab was a "thrilling beginning" became so widely distributed that it was viable as
High school drug use
ANN ARBOR, Mich. (AP) Recent
progress in reducing drug use among
high school students • seems to have
stalled in 1985, a study released yes
terday says.
An annual University of Michigan
survey of America's high school se
niors turned up a troubling increase
in cocaine use in the class of 'B5, and
drug use among the students didn't
EQUESTRIAN DIVISION
Penn State Outing Club
MEETING & FILM
Thur. Nov. 7 7:00 318-319 HUB
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Blood Doping and Injuries;
discussion topic featuring:
Tim Madden, PSU Athletic Trainer,
PSU Cycling Club
Thur. Nov. 7 7:30 p.m.
217 Willard
decline for the first time in five years.
Researchers at the university's In
stitute for Social Research reported
that 1985 graduates showed statisti
cally significant increases in use of
cocaine, PCP and opiates other than
herion, and decreased interest in
amphetamines, methaqualone and
LSD.
Use of eight other illicit drugs in-
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in the University's effort to rededicate itself to
industrial development.
Minitab now services over 1,500 customers in 45
Round trip
29.95
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31.45
reduction stalls in 'B5
eluded in the study held about steady.
"The rates of illicit drug use which
exist among American young people
today are still troublesomely high
and certainly remain higher than in
any other industrialized nation in the
world," said Lloyd Johnston, one of
three social psychologists who di
rected the study.
"Add to that the fact that the use of
PLANNING TO ATTEND LAW SCHOOL?
A representative from the Camden Low School of
Rutgers University will be on campus Monday, November
1 1 th, from 9:00 a.m. to 12:00 noon.
If you would like an appointment to discuss low at
Camden, please contact Ms. Jane Tarbox in 107' Bur
rowes Building betwwen 8:00 a.m. and 12:00 noon,
Monday through Friday.
a business," Thomas Ryan said. "At that point it
wasn't appropriate at the University, it was more
appropriate as a business
Jordan said the University is dedicated to the
idea of joint venturing and helping the community
grow. He added that when jobs are created "the
economy becomes healthier and healthier."
Constructed by the Hughes-Crawford Company
Inc. of Altoona and designed by architect Freder
ick J. Fernsler of State College, the new 9,000
square-foot building provides office space for 23
employees, Thomas Ryan said, adding that Mini
tab expects to employ 35 people by 1988.
"This building is designed to be doubled. The
entrance-way will be the center of the building and
there will be a mirror entrance of the present one
on the other side." Barbara Ryan said.
Minitab is equipped with showers for employees
who jog during lunch hour, a rowing machine, a
stationary bike and a multi-purpose room where
aerobics are held three times a week, Barbara
Ryan said.
one of the most dependence-produc
ing substances know to , man co
caine is once again increasing and
you have grounds for real concern."
Sixty-one percent of the Class of 'B5
admitted trying an illicit drug at
some time, with 40 percent admitting
use of a drug besides marijuana.
That's almost identical to the Class of
'B4, the researchers said.
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The Daily Collegian Thursday, Nov. 7, 1985-3
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