If You (or Your Students) Can Answer All Five of These Questions Correctly...

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Jul 19, 2016
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Stocks, Question of the Day, Research, Personal Finance, Investing, Savings, Financial Literacy, Quizzes, Compound Interest, Interactive

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…than they have more financial knowledge than 86% of the US population (according to recent National Financial Capability Study):

  1. 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

  2. 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

  3. 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

  4. 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.

  5. True or false: Buying a single company’s stock usually provides a safer return than a stock mutual fund. 46% got correct answer.

  6. 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

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Looking for more questions, be sure to check out the NGPF Assessments!

 

About the Author

Tim Ranzetta

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.