Tuesday, January 09, 2018

a quiz of your financial acumen

Click here for the quiz's answers. (Quiz slightly edited for clarity.)

1. Which of the following statements describes the main function of the stock market?
a) The stock market brings people who want to buy stocks together with people who want to sell stocks.
b) The stock market helps predict stock earnings.
c) The stock market results in an increase in the price of stocks.
d) none of the above
e) not sure

2. If you had $100 in a savings account and the interest rate was 2 percent per year, then after 5 years, how much do you think you would have in the account if you left the money to grow?
a) exactly $102
b) less than $102
c) more than $102
d) not sure

3. If the interest rate on your savings account was 1 percent per year, and inflation was 2 percent per year, how much would you be able to buy, after 1 year, with the money in this account?
a) more than today
b) exactly the same as today
c) less than today
d) not sure

4. Which provides a safer return: buying a single company’s stock or a mutual fund?
a) single company’s stock
b) mutual fund
c) not sure

According to the article from which I stole the above quiz, 44% of Boomers and 39% of Millennials got Question 1 right. 82% of Boomers and 73% of Millennials got Question 2 right. 73% of Boomers and 40% of Millennials(!!) got Question 3 right. Finally, 67% of Boomers and 51% of Millennials got Question 4 correct.

These quiz questions are so commonsensical that it boggles my mind that anyone might score less than 100%. I would, however, reword Question 4 by adding the word "generally" in front of "provides." As one commenter noted regarding that question: "There are exceptions."



5 comments:

Charles said...

Yay, I got them all right!

I also managed to tie my shoes all by myself this morning.

Kevin Kim said...

You crack me up.

Horace Jeffery Hodges said...

Well, I did better than 100 percent because I got every answer right, and I also managed to tie those velcro shoelaces they put on shoes these days! Everything would have been wonderful except that my wife had placed my shoes improperly arranged - left for right, and right for left - so I had to put them on that way and suffer all sorts of discriminations. Later, I was trapped three hours on a stopped escalator, but got off without injury.

Jeffery Hodges

* * *

Kevin Kim said...

Jeff,

I'm sure the escalator was sad to lose you.

John John McCrarey said...

damn, that was a lot of pressure. I got 100% as well, and I wasn't wearing shoes!