Can you pass this personal financial literacy test?

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Are these the real questions? They sound like the prison IQ test questions from Idiocracy.


One of these questions is not like the others. Four are basic financial literacy, one is calculate compounding interest in your head. (And that one doesn’t even get the point of compounding interest across; it’s what happens in 20 years that’s interesting, not 5.)


When I was in grade school [6th grade? or so] my Math Teacher gave each of us a check book and we had to balance it weekly, it represented 50% of our grade, personally I loved it and found it very simple to do.

This is sorely missing from our School System!


Answer for 2) is debatable:
Doubling your gross income puts you in higher bracket, so pay more than double taxes.
Who is to say brackets grow alongside income?


Many of these questions are not as simple as they appear.

  1. If you don’t have a lot of money, spreading small amounts over a larger area can COST you money. There are higher fees on small transactions (for example, did you know that you can actually lose money in a savings account if you don’t add to it regularly?).

  2. Remember that first you buy essentials like rent, utilities and food. They may not have gone up the same percentage equally. Also, if you’re making twice as much after 10 years of work experience, you might have higher costs due to wearing suits instead of jeans to work, for example.

  3. Is that 3% being paid back in a lump sum or is it amortized over time? This is the biggest thing to watch out for in mortgages: don’t just look at the interest rate!

  4. OK, that’s true…as long as there are no fees on the account in the meantime. Which is likely, these days.

  5. I agree with @bobbymartin2’s point that this is not the same kind of question. And again, you can’t just park $100 in a savings account for 5 years and expect there won’t be fees due to non-activity.


I want to know which bank is offering 15% a year interest.


I was never amazing at maths (scraped a C grade at GCSE somehow) but 1-4 seem blatantly obvious…

5 i’ll admit is a bit tricky, i’d need a calculator or pen+paper to work that out but i could sit down and work it out…

Does worry me with that only 33% could pass 3/5 of that though :open_mouth:


100*1.1^5 is… I can’t work that out mentally.


That’d be my mental chain for that. I got bored writing it down. I suck at mental math, but this seems like a stretch to expect Joe Average Public to be able to do on demand, quickly enough that the loan officer or whoever doesn’t just say “come back tomorrow when you have the math figured out”.


I see what you’re getting at there, with real world hidden fees and vagaries.
But if you take the questions at face value (for example #2 i’d read as all prices and incomes uniformly double, not just on average / fees are not mentioned in any way) then the answer is straightforward.

I’d treat this more as an exam question than real life here…

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I got 5 of 5. Why do my bank accounts look the way they do? That must be question 6.

  1. Get a time machine.
  2. Dial back a generation or so.

Warning: (1) might be problematic.


It’s just triangular numbers - 11, 121, 1331, 14641, errrm 15101051 carry the one, umm. Oh - about 160.


Knowing what you are supposed to do and doing it are two different things.


I see most of them are palindromes, but I’m unfamiliar with the term Triangular Numbers.

After you’ve googled the phrase, connecting Pascal with powers of 11 is the only bit that really matters here.

Rows in Pascal’s Triangle.

The one that doesn’t seem to be a palindrome has two "10"s in a row.

Not quite the same as triangular numbers, which correspond to the number of items in triangular “stacks” of various sizes: 1, 3, 6, 10, 15, 21, …

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Felix Salmon over at Fusion poked some giant holes in this study. And he was right, it’s measuring global financial knowledge against global 1% standards:


Still a palindrome, but now you’ve got to start carrying 1s and losing the pattern in the final answer. But the palindromicity wasn’t important anyway.

Oh - and yes to your correction - it’s the sums which are the actual triangular numbers. But the others are on the way :slight_smile:

Some of these questions require some assumptions to get the answers provided.

“Question: Suppose you have some money. Is it safer to put your money into one business or investment, or to put your money into multiple businesses or investments?”

It depends on the investments. Putting all your money is berkshire hathoway compared to 5 emerging market micro caps or lending to some guy you met in a bar who wants to start a business. The assumption that we’re comparing investments of similar risk profile isn’t obvious.

“Question: Suppose you need to borrow $100. Which is the lower amount to pay back: $105 or $100 plus three percent?”

Depends on the timeframe. I’d much prefer to pay back $105 after 10 years, than $100 plus three percent interest per year after 10 years.