If You (or Your Students) Can Answer All Five of These Questions Correctly...
…than they have more financial knowledge than 86% of the US population (according to recent National Financial Capability Study):
- You can have them take the quiz directly from the site OR answer the questions below (choices are in brackets):
Suppose you have $100 in a savings account earning 2 percent interest a year. After five years, how much would you have? [More than $102, Less than $102, Exactly $102]; 75% got correct answer
Imagine that the interest rate on your savings account is 1 percent a year and inflation is 2 percent a year. After one year, would the money in the account buy more than it does today, exactly the same or less than today? [Buy more, Buy the same, Buy less than today]; 59% got correct answer
If interest rates rise, what will typically happen to bond prices? Rise, fall, stay the same, or is there no relationship? [Rise, Fall, Stay the same, No relationship]; 28% got correct answer
True or false: A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage but the total interest over the life of the loan will be less. 75% got correct answer.
True or false: Buying a single company’s stock usually provides a safer return than a stock mutual fund. 46% got correct answer.
BONUS 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? [Less than 2 Years, 2-4 Years, 5-9 Years, 10 or More]; 33% got correct answer
Looking for more questions, be sure to check out the NGPF Assessments!
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.
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