Borrowing

Apr 8, 2022

The Financial Literacy Quiz

By Stash Team

Find out how well-versed you are when it comes to your money.

You probably know that being financially literate is important, but you may not know how financially literate you are.

Being financially literate means having an essential understanding of how you manage your money, including budgeting, saving, spending, and investing. It also means having an understanding of how the economy can affect your personal financial situation.

No matter how much you already know about money, everyone has room to learn more. Take Stash’s financial literacy quiz to find out where you stand on some basics:

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The Financial Literacy Quiz

Do you know what the current rate of inflation is in the U.S., as measured by the year-over-year Consumer Price Index (CPI)?

0.9%

2.4%

6.3%

7.9%

As of February 2022, the CPI was 7.9% year-over-year, the highest rate of inflation since 1982.

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The Financial Literacy Quiz

If you put $100 into a savings account that earns 2% compound annual interest, how much could you have in your account in six years?

Less than $102

Between $102 and $105

Between $105 and $110

More than $110

After six years, you’d have about $112.62. When you earn compound interest, the interest gets added to the principal amount invested or borrowed, and then the interest rate applies to the new (larger) principal.

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The Financial Literacy Quiz

Say you have a savings account that earns a yearly interest rate of 2%, and the inflation rate is 3%. Would your money be able to buy more, less, or the same after one year?

Less

The same

If the inflation rate is higher than your interest rate, your money will lose value in that account.

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The Financial Literacy Quiz

You’re buying a house for $400,000. How much should you put down, according to the standard percentage down payment?

$20,000

$80,000

$100,000

$120,000

It’s standard to put down 20% on the total price of a house. Twenty percent of $400,000 is $80,000.

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The Financial Literacy Quiz

You’re choosing between a 15-year and 30-year mortgage. A 15-year mortgage has higher monthly payments than a 30-year one. Which one will you typically end up paying more interest on over the term of the loan?

15-year mortgage.

30-year mortgage.

With a 15-year mortgage, your monthly payments will likely be higher than those of a 30-year mortgage. Overall, however, you’d spend less in interest on a 15-year mortgage, and get paid off more quickly.

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The Financial Literacy Quiz

What is considered a perfect credit score?

300

450

850

900

A credit score can range from 300 to 850. The better your credit, the higher your score. Perfect credit is 850.

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The Financial Literacy Quiz

In March, the Federal Reserve (the Fed) raised the federal funds rate for the first time since 2018. What did it raise the rate to?

Between 0.10% and 0.25%

Between 0.25% and 0.50%

Between 0.50% and 0.75%

Between 0.75% and 1.00%

The Fed has kept the benchmark rate near 0% since the beginning of the pandemic. In March, the Fed raised the rate to between 0.25% and 0.50% to combat inflation.

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The Financial Literacy Quiz

Increasing the federal funds rate tends to result in:

Higher inflation

Lower credit card interest rates

Lower mortgage rates

Higher mortgage rates

The benchmark rate tends to dictate interest rates for people borrowing money. So when the benchmark rate goes up, mortgage rates also tend to increase.

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The Financial Literacy Quiz

What’s one thing you can do with your money to combat inflation?

Invest

Keep your money in a checking account

Put it under your mattress

Spend as much of it as possible

Investing some of your money in a diversified portfolio gives your money a chance to grow more than it might in a traditional savings account, potentially outpacing inflation over time.

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The Financial Literacy Quiz

You purchase 1,000 in shares of a company. For the most recent quarter, that company is paying shareholders $0.25 per share in dividends to shareholders. How much will you receive in dividends?

$30

$250

$400

$1,000

Dividends are shares of a company’s profits, which are paid to its shareholders in proportion to the number of shares they own. To find the dividend amount, take the dividend per share amount and multiply by the number of shares.

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The Financial Literacy Quiz

You have an employer-sponsored 401(k) plan. Your employer has said it will match up to 3% of your pay in 401(k) contributions per year. What amount would that be the max employer match if you earn $75,000 annually?

$100

$550

$1,725

$2,250

If you earn $75,000, and your employer matches up to 3% of your 401(k) contributions, your employer will contribute up to $2,250 per year.

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The Financial Literacy Quiz

Investing in a single company’s stock generally provides a lower risk return than investing in an equity exchange-traded fund (ETF).

True

False

The value of any single stock can increase or decrease suddenly, depending on what’s going on in the markets or the broader economy. An ETF is a basket of stocks that might not all move in the same direction, allowing you to spread your risk more.