Financial Literacy Test
“Financial literacy is an important part of avoiding financial mistakes and planning for a strong, secure financial future,” Tim Pawlenty once said.
Your level of financial literacy determines your financial situation and financial future. According to research published by the American Economic Association, the total net worth of a family is positively and significantly associated with its financial literacy. The research also states that financial literacy is more important than schooling for explaining variation in household wealth. It indicates that financial literacy is of the essence in building wealth.
So, are you financially literate? Let’s find out!
The financial Literacy test
To help you assess your financial literacy, we have prepared for you a financial literacy test. This test contains 5 questions designed to assess your knowledge on these 4 areas:
- Risk diversification
- Inflation
- Numeracy
- Compound interest
Let‘s test your financial literacy!
Now, here comes the most crucial question — how financially literate are you? Are you good enough? Well, take the test below, and you will know right away.
Without further ado, let‘s begin the test!
Question 1 of 5
Suppose you have some money to invest. Is it safer to invest your money into one business or investment, or to invest your money into multiple businesses or investments?
Question 2 of 5
Suppose, in 10 years, your income doubles but the prices of the things you buy also double. Will you be able to buy more than you can buy today, the same as you can buy today, or less than you can buy today?
Question 3 of 5
Suppose you need to borrow $100. Which is the lower amount to pay back: $100 plus 3% or $105?
Question 4 of 5
Suppose you decided to deposit money in the bank for two years. Every year, the bank agrees to add 15% to your account. Will the same amount of money be added to your account both years, or will you get more money the second year than you did the first year??
Question 5 of 5
Suppose you deposited $100 in a savings account today. Every year, the bank adds 10% to the account. In 5 years, how much money would you have in the account if you did not withdraw any money from the account?