3 Questions to Assess Financial Literacy

Most Americans can't answer the following three questions correctly.  Can you?

Question 1:

Suppose you have $100 in a savings account and the interest rate was 2 percent per year. After 5 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


Question 2:

Imagine that the interest rate on your savings account was 1 percent per year and inflation was 2 percent per year. After one year, how much would you be able to buy with the money in this account?

A) More than today

B) Exactly the same as today

C) Less than today


Question 3:

Do you think the following statement is true or false:

Buying a single company stock usually provides a safer return than a stock mutual fund.