Financial Literacy Quiz

One of the biggest problems Americans have is we believe we know more about money than we do. We are 70% overconfident about our money skills, and so we take risks we never should.

How many can you get right?

Interest Rate Question

Suppose you had $100 in a savings account, and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow?

1. More than $102
2. Exactly $102
3. Less than $102

Inflation Question

Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account?

1. More than today
2. Exactly the same
3. Less than today

Risk Diversification Question

Buying a single company’s stock usually provides a safer return than a stock mutual fund.

1. True
2. False

Bond Pricing Question

If interest rates rise, what will typically happen to bond prices?

1. They will rise
2. They will fall
3. They will stay the same
4. There is no relationship between bond prices and the interest rate

Compound Interest Rate Question

Suppose you owe $1,000 on a loan and the interest rate you are charged is 20% per year compounded annually. If you didn’t pay anything off, at this interest rate, how many years would it take for the amount you owe to double?

1. Less than 2 years
2. At least 2 years, but less than 5 years
3. At least 5 years, but less than 10 years
4. At least 10 years

Mortgage Question

A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage, but the total interest paid over the life of the loan will be less.

1. True
2. False

Scroll down to find the answers…

Answers: [1, 3, 2, 2, 2, 1]