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Take the FINANCIAL LITERACY QUIZ! HOW MUCH DO YOU KNOW about Finances?

Take the FINANCIAL LITERACY QUIZ! HOW MUCH DO YOU KNOW about Finances?

1. Interest Rate:
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?

  • More than $110
  • Exactly $110
  • Less than $110

 

2. Inflation:
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?

  • More than today
  • Exactly the same
  • Less than today

 

3. Risk:
Is this statement True or False? Buying a single company’s stock usually provides a safer return than a stock mutual fund.

  • True
  • False

 

4. Tax Offset:
Assume you were in the 25 percent tax bracket (you pay $0.25 in tax for each dollar earned) and you contributed $100 pretax to an employer’s 401(k) plan. Your take-home pay (what’s in your paycheck after all taxes and other payments are taken out) will then:

  • Decline by $100
  • Decline by $75
  • Decline by $50
  • Remain the same

 

5. Match:
Assume that an employer matched employee contributions dollar for dollar. If the employee contributed $100 to the 401(k) plan, his account balance in the plan including his contribution would:

  • Increase by $50
  • Increase by $100
  • Increase by $200
  • Remain the same

Answers:

  • 1. More than $110
  • 2. Less than today
  • 3. False
  • 4. Decline by $75
  • 5. Increase by $200

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