Only 34% of respondents passed this 6-question financial literacy quiz — try it yourself here


Only 34% of respondents correctly answered four or more of the six personal finance questions on FINRA's 2018 National Financial Capability Study. FINRA, or the Financial Industry Regulatory Authority, conducted an online survey of 27,091 American adults.

Experts say developing financial literacy should be an ongoing process, since it can help shape your relationship with money. There's a clear link between financial knowledge and financial well-being, and those who are financially literate are much more likely to plan for retirement and stay on course.

We recreated FINRA's quiz so you can see how much you know about basic financial concepts, and where you may need to fill in some gaps. If you don't know all the answers, don't fret. And if you have a money question you'd like for us to address, email us at, and our expert money advice columnists, including Ramit Sethi and Farnoosh Torabi, may share their thoughts.

1. Suppose you have $100 in a savings account earning 2% interest a year. After five years, how much would you have?
  • More than $102
  • Exactly $102
  • Less than $102
That's correct.
That's incorrect.
This is an example of how compound interest works. In this scenario, your initial investment will grow by 2% each year. That means you’ll also earn 2% on the interest you’ve previously earned. After one year, you’ll have $102; after five years, your investment will be worth slightly more than $110. Compounding interest is the reason it’s important to start saving for retirement as soon as possible.
2. Imagine that the interest rate on your savings account is 1% a year and inflation is 2% a year. After one year, would the money in the account buy more than it does today, exactly the same or less than today?
  • More
  • Same
  • Less
That's correct.
That's incorrect.
Inflation means prices are going up on items we buy, which means our purchasing power, or the value of our money, goes down. A 2% inflation rate means the purchasing power of the money in your account decreases by 2%.
3. If interest rates rise, what will typically happen to bond prices?
  • Rise
  • Fall
  • Stay the same
  • No relationship
That's correct.
That's incorrect.
When you buy bonds, you’re loaning money to a government or a corporation in exchange for a fixed interest rate and the expectation that you will be paid back by a specific date in the future. Bonds typically offer lower returns than stocks, but they involve less risk.

When interest rates rise, bond prices fall because investors can get better returns from other investments. Conversely, when people are eager to buy bonds, that pushes the price higher and the rates lower.
4. True or false: A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage but the total interest over the life of the loan will be less.
  • True
  • False
That's correct.
That's incorrect.
Because you're paying it off more quickly, you pay less in interest overall with a 15-year mortgage. But it still might not be the best financial decision: A shorter mortgage term comes with higher payments.
5. True or false: Buying a single company's stock usually provides a safer return than a stock mutual fund.
  • True
  • False
That's correct.
That's incorrect.
When you invest in something like a mutual fund, ETF, or an index fund, you're buying a basket of investments. That spreads the risk. Your investment isn't dependent on the fortunes of a single company. And even though individual stock prices can fluctuate wildly, a broader index often goes up over time.
6. Suppose you owe $1,000 on a loan and the interest rate you are charged is 20% per year compounded annually. If you didn't pay anything off, at this interest rate, how many years would it take for the amount you owe to double?
  • Less than two years
  • Two to four years
  • Five to nine years
  • 10 or more years
That's correct.
That's incorrect.
This is another example of compound interest in action. This scenario shows how it can work against you. Here, you would owe $1,200 after the first year and $1,440 after the second because you are being charged interest on the interest you’ve already accumulated. This means after year three you’d owe $1,728 and would owe double your original debt, or $2,000, before reaching the four-year mark.

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