A Quiz I’m Sure You All Know The Answers To, RIGHT?

Here is a little personal finance quiz, as referenced in this Moisés Naím piece for the Atlantic. Only 30% of Americans aced this thing, so if you do, give yourself a little pat on the back. And a cookie. It’s Friday.

1. Suppose you had $100 in a savings account and the interest rate was 2 percent per year. After five years, how much do you think you would have in the account if you left the money to grow? A) more than $102; B) exactly $102; C) less than $102; D) do not know; refuse to answer.

2. Imagine that the interest rate on your savings account is 1 percent per year and inflation is 2 percent per year. After one year, would you be able to buy A) more than, B) exactly the same as, or C) less than today with the money in this account?; D) do not know; refuse to answer.

3. Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.” A) true; B) false; C) do not know; refuse to answer.

The correct answers are 1-A; 2-C; and 3-B.

The Russians did the worst but sssh, they are going through enough as it is.

Photo: futurilla

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9 Comments / Post A Comment

wrappedupinbooks (#1,426)

i love tests where i score above the median

OllyOlly (#669)

I was going to feel so shitty about degree if I didn’t pass that, but I did hooray.

Stina (#686)

@OllyOlly I avoided it for a while out of fear that I’d bite it horribly but I passed too.

Ha, ME TOO.

samburger (#5,489)

I have so many mixed feelings about these things. There’s very similar ~scary studies~ in every other field of knowledge ever, and they all show that only 3% of the US is good at answering these types of questions financially/scientifically/religiously/etc literate.

Aconite (#6,401)

I’m not surprised about the scary stats in the piece. Finance education is always presented in such a bloody boring way that it’s no wonder people aren’t interested. Either that or it’s completely wrong – one explanation given to us at school was that “you put money in the bank, and the bank pays you a little bit of extra money to say thanks”. Ha. I also seem to recall that a lot of the finance education was provided by…retail banks. Surprise!

Money ISN’T boring and learning about it doesn’t have to be intimidating. But not understanding it leaves people wide open to be taken advantage of, or simply make the wrong decisions. It’s a long time dream of mine to set up an independent finance education charity – I really believe that with the right sort of guidance, and with no promotional bullshit, people can quickly become empowered and confident about money.

This quiz is scary easy. Even if you don’t know anything about finance, all you have to know is interest and inflation, and a little simple math. Inflation is a concept that affects every single person living every single day. This is sad.

HelloTheFuture (#5,275)

I love how they structured question 1 to skillfully elide that you’d only get $110.40 after five years. “Compound interest is a great way to earn money!”

sherlock (#3,599)

@HelloTheFuture Glad to see I wasn’t the only person who immediately started doing the math in my head before getting to the choices and realizing I was over thinking it . . .

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