Take MarketWatch’s 2023 Financial Literacy Quiz. Will you get 10/10?

April is National Financial Literacy Month. To mark the event, MarketWatch will publish a sequence of “Financial Fitness” articles to assist readers enhance their fiscal well being, and supply recommendation on learn how to save, make investments and spend their cash correctly. Read extra right here.

Do you recognize the distinction between a inventory and a bond, or a mutual fund and an exchange-traded fund? MarketWatch put collectively a meat and potatoes — though that’s at all times relative — quiz for our savvy readers. We’ve caught to some acquainted matters — taxes, shares, rates of interest, financial savings and inflation. There are 10 questions — with one bonus query thrown in for good measure.

You don’t know what you don’t know till you get an incorrect reply in a monetary literacy quiz. Some of the questions are difficult, however we hope they’re enjoyable and that — most significantly — readers be taught one thing new. Financial literacy helps us to plan for the longer term, offers us peace of thoughts and brings extra understanding and fewer worry in regards to the complicated world of investing and retirement.

Our intention is to boost consciousness of Financial Literacy Month. If you get 10/10, together with the bonus query, purchase your self (and a pal) a popsicle. If you didn’t reply all of the questions appropriately, purchase your self a popsicle anyway. We, at MarketWatch, intention to democratize and demystify monetary news, and make this typically intimidating topic as accessible as potential.

If you discovered it helpful and/or entertaining, share it with a pal.

–Quentin Fottrell

Question 1: What is the distinction between a tax deduction and a tax credit score? 

(a) A tax deduction reduces your earnings taxes immediately. A tax credit score reduces your taxable earnings. 

(b) A tax deduction reduces your taxable earnings. A tax credit score reduces your earnings taxes immediately.

(c) Both cut back your earnings taxes immediately.

Question 2: Which means do bond costs transfer when rates of interest rise? 

(a) Bond-market costs fall as rates of interest rise. Bond costs rise when rates of interest decline.

(b) Bond-market costs rise as rates of interest rise. Bond costs fall when rates of interest decline.

(c) Bond-market costs fall as rates of interest rise, however bond costs additionally fall when rates of interest decline.

Question 3: What has been the common annual whole return, with dividends reinvested, for the S&P 500 over the previous 30 years? 

(a) 9.7%, in keeping with FactSet.

(b) 3%, in keeping with FactSet.

(c) 6.5%, in keeping with FactSet.

Question 4: What is compound curiosity and the way does it work? 

(a) Compound curiosity displays the linear acquire that comes from all of the reinvested curiosity of your financial savings and investments, which permits your preliminary funding/deposit to achieve worth whatever the quantity of curiosity you pay.

(b) Compound curiosity displays the exponential acquire that comes from all of the reinvested curiosity of your financial savings and investments, which permits your preliminary funding/deposit and the extra curiosity to extend in worth.

(c) Compound curiosity displays the quantity of curiosity you pay each month on a mortgage, and the entire quantity of curiosity you have got paid over the lifetime of that mortgage.

Question 5: What is APR and the way is it completely different from an everyday rate of interest?

(a) APR is the annual curiosity on a mortgage calculated on the preliminary mortgage, together with further prices and charges, however not on the collected curiosity incurred on the mortgage. 

(b) APR is the annual curiosity on a mortgage calculated on the preliminary mortgage and the collected curiosity over the primary yr.

(c) APR is the annual curiosity on a mortgage calculated on the preliminary mortgage, together with further prices and charges, and the collected curiosity over the lifetime of the mortgage mortgage.

Question 6: What proportion of your earnings must you spend on lease?

(a) Most real-estate consultants say you need to spend not more than 20% of your earnings on housing prices, which is taken into account to be a tipping level for turning into “cost-burdened.”

(b) Most real-estate consultants say you need to spend not more than 50% of your earnings on housing prices, which is taken into account to be a tipping level for turning into “cost-burdened.”

(c) Most real-estate consultants say you need to spend not more than 30% of your earnings on housing prices, which is taken into account to be a tipping level for turning into “cost-burdened.”

Question 7: What’s an ETF? 

(a) ETFs, or Exchange-Traded Funds, are baskets of investments — shares, bonds, or commodities — that buyers should purchase all through the buying and selling day like shares. 

(b) ETFs, or Exchange-Traded Funds, are baskets of investments — shares, bonds, or commodities — that buyers can solely purchase on the finish of the buying and selling day. 

(c) ETFs, or Exchange-Traded Funds, are baskets of investments — shares, bonds, or commodities — that buyers can solely purchase throughout or on the finish of the buying and selling day.

Question 8: What is the distinction between a inventory and a bond? 

(a) A inventory is a short lived funding in an organization, whereas a bond is issued by an organization to reward shareholders. 

(b) A inventory is a share within the possession of an organization, whereas a bond is issued by an organization to finance a mortgage. 

(c) A inventory is a share within the possession of an organization, whereas a bond is issued by an organization to finance the inventory.

Question 9: If you had been born in 1960 or later, at what age are you able to obtain your full Social Security within the U.S.? Bonus query: At what age are you able to obtain your most Social Security profit?

(a) Full retirement age within the U.S. is 65 for these born in 1960 and after. While you can begin amassing your Social Security retirement advantages as early as 62, your advantages are completely lowered. Your Social Security advantages max out at age 70. By delaying till 70, your profit is 76% greater than in case you had claimed on the earliest potential age (62).

(b) Full retirement age within the U.S. is 65 for these born in 1960 and after. While you can begin amassing your Social Security retirement advantages as early as 62, your advantages are completely lowered. Your Social Security advantages max out at age 67. By delaying till 67, your profit is 76% greater than in case you had claimed on the earliest potential age (62).

(c) Full retirement age within the U.S. is 67 for these born in 1960 and after. While you can begin amassing your Social Security retirement advantages as early as 62, your advantages are completely lowered by a small proportion every month till you attain 67. Your Social Security advantages max out at age 70. By delaying till 70, your profit is 76% greater than in case you had claimed on the earliest potential age (62).

Question 10: What is the Federal Reserve’s desired charge of inflation? 

(a) 2%

(b) 3%

(c) 2.5%

Bonus query! What is taken into account a very good credit score rating?

(a) 560

(b) 680

(c) 800

If you get 10/10, together with the bonus query, purchase your self a popsicle.


Getty Images/iStockphoto

Answer 1: 

(b) A tax deduction reduces your taxable earnings. A tax credit score reduces your earnings taxes immediately.

Answer 2: 

(a) Bond-market costs fall as rates of interest rise. Bond costs rise when rates of interest decline. 

Answer 3: 

(a) 9.7%, in keeping with FactSet. 

Answer 4: 

(b) Compound curiosity displays the exponential acquire that comes from all of the reinvested curiosity of your financial savings and investments, which permits your preliminary funding/deposit and the extra curiosity to extend in worth.

Answer 5: 

(c) APR is the annual curiosity on a mortgage calculated on the preliminary mortgage, together with further prices and charges, and the collected curiosity over the lifetime of the mortgage. 

Answer 6: 

(c) Most real-estate consultants say you need to spend not more than 30% of your earnings on housing, which is taken into account to be a tipping level for turning into “cost-burdened.”

Answer 7: 

(a) ETFs are Exchange-Traded Funds. These are baskets of investments — shares, bonds, or commodities — that buyers should purchase or promote all through the buying and selling day.  

Answer 8: 

(b) A inventory is a share within the possession of an organization, whereas a bond is issued by an organization to finance a mortgage. 

Answer 9: 

(c) Full retirement age within the U.S. is 67 for these born in 1960 and after. While you can begin amassing your Social Security retirement advantages as early as 62, your advantages are completely lowered. Your Social Security advantages max out at age 70. By delaying till 70, your profit is 76% greater than in case you had claimed on the earliest potential age (62).

Answer 10: 

(a) 2%

Answer for bonus query! 

(b) 680. Although credit score scores fluctuate relying on the mannequin, in keeping with Experian, credit score scores between 580 and 669 are thought-about “fair,” scores between 670 and 739 are thought to be “good”; 740 to 799 are thought-about “very good”; and scores of 800 and above are thought-about “excellent.”

Source web site: www.marketwatch.com

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