6-question financial literacy quiz

[Full_Beard]

Meant to test your off-the-top-of-your-head knowledge.

http://www.usfinancialcapability.org/quiz.php

Article discussing general population's lack of knowledge:

http://www.nytimes.com/2016/07/24/your-money/what-you-think-you-know-about-money-but-dont-can-hurt-you.html?contentCollection=smarter-living&hp&action=click&pgtype=Homepage&clickSource=story-heading&module=second-column-region&region=top-news&WT.nav=top-news

[TheAnonOne]

6/6 but I suspect as long as anyone doesn't go to fast it should be obtainable. They were... pretty elementary. (clearly the article shows that this isn't true)

[PhysicianOnFIRE]

100%. Boosting the numbers for my state. I should take it a few more times.

[MoonLiteNite]

This can't be real? The only one that i could see the average person NOT getting right the bond question, everything else is basic math....

[WerKater]

This can't be real? The only one that i could see the average person NOT getting right the bond question, everything else is basic math....

That probably explains it already. I know a surprising number of people who are not only bad at math but almost scared of it. Show them math, you can see how their brains shut off immediately.

[chesebert]

"Should you buy a bond with negative interest rates? Certainly not if you don’t understand bond basics."

Don't think I would agree with that. This statement is correct in theory but doesn't work in real life. Central banks will not move the interest rate fast enough to tank the bond market. If central banks decide to up the interest rate bond prices will gradually move lower or not depending on stocks and other KPI.

[aboatguy]

Six for Six here! 
The questions were really basic.
 I believe I would have aced it back when I was in middle school and I have a Hawaii public school education (my middle school was Kailua intermediate)

Mike

[TheAnonOne]

Six for Six here! 
The questions were really basic.
 I believe I would have aced it back when I was in middle school and I have a Hawaii public school education (my middle school was Kailua intermediate)

Mike

You would have had known....

A. What a bond is
B. It's semi-complex relationship to central banking interest rate moves

I probably would have had missed this one when I was in middle-school.

[HPstache]

Not a difficult quiz... but I'll be the average person may not even understand many of the words and would probably only get one or two correct.

[dougules]

I'm happy that the average person has gotten more than half of them right.  The down side, though, is that the people that taking this quiz are probably not exactly a representative sample of the population. 

[ooeei]

I missed the bond one :P

Granted, I've never purchased an individual bond in my life, nor do I plan to.  I was thinking that when interest rates go up, bonds pay more interest, and somehow equated that to a rise in price. 

[I'm a red panda]

"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."

This certainly seems to depend on what kind of interest rate I could get on either loan.

6 out of 6 though.

[HPstache]

"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."

This certainly seems to depend on what kind of interest rate I could get on either loan.

6 out of 6 though.

What's realistic situation where a 15 year loan would be cheaper than a 30 year loan?

[I'm a red panda]

"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."

This certainly seems to depend on what kind of interest rate I could get on either loan.

6 out of 6 though.

What's realistic situation where a 15 year loan would be cheaper than a 30 year loan?

Two different people with vastly different credit taking them out? 
A 15-year car loan (don't think we are quite up to those yet...but the fact that you can get 8 years is insane) vs. a 30-year mortgage?
 

 The scenario laid out says NOTHING about what these loans are for, who is taking them out.

[Jack]

"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."

This certainly seems to depend on what kind of interest rate I could get on either loan.

6 out of 6 though.

What's realistic situation where a 15 year loan would be cheaper than a 30 year loan?

Two different people with vastly different credit taking them out? 
A 15-year car loan (don't think we are quite up to those yet...but the fact that you can get 8 years is insane) vs. a 30-year mortgage?
 

 The scenario laid out says NOTHING about what these loans are for, who is taking them out.

Loans for things other than real estate are not typically called "mortgages."

[I'm a red panda]

"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."

This certainly seems to depend on what kind of interest rate I could get on either loan.

6 out of 6 though.

What's realistic situation where a 15 year loan would be cheaper than a 30 year loan?

Two different people with vastly different credit taking them out? 
A 15-year car loan (don't think we are quite up to those yet...but the fact that you can get 8 years is insane) vs. a 30-year mortgage?
 

 The scenario laid out says NOTHING about what these loans are for, who is taking them out.

Loans for things other than real estate are not typically called "mortgages."

That's true, for some reason I was thinking it just said loan and didn't read back. So let's just stick with the first thing I wrote.  Two people with very different credit will be offered different interest rates.

Or how about - mortgages granted in two different years?  When I look back at our old house's 15 year loan, it's insane what a "good rate" was then.

Or mortgages of two different sizes. A 15-year loan on a more expensive house will have more interest than a 30-year loan on a much less expensive one.

[ooeei]

"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."

This certainly seems to depend on what kind of interest rate I could get on either loan.

6 out of 6 though.

What's realistic situation where a 15 year loan would be cheaper than a 30 year loan?

Two different people with vastly different credit taking them out? 
A 15-year car loan (don't think we are quite up to those yet...but the fact that you can get 8 years is insane) vs. a 30-year mortgage?
 

 The scenario laid out says NOTHING about what these loans are for, who is taking them out.

Loans for things other than real estate are not typically called "mortgages."

That's true, for some reason I was thinking it just said loan and didn't read back. So let's just stick with the first thing I wrote.  Two people with very different credit will be offered different interest rates.

Or how about - mortgages granted in two different years?  When I look back at our old house's 15 year loan, it's insane what a "good rate" was then.

Or mortgages of two different sizes. A 15-year loan on a more expensive house will have more interest than a 30-year loan on a much less expensive one.

I think it's pretty obviously implied that the only difference between the loans is their term length, since that's the only characteristic mentioned.  It also even says "typically" in the beginning because I'm sure out there somewhere there's an anomaly.

[I'm a red panda]

"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."

This certainly seems to depend on what kind of interest rate I could get on either loan.

6 out of 6 though.

What's realistic situation where a 15 year loan would be cheaper than a 30 year loan?

Two different people with vastly different credit taking them out? 
A 15-year car loan (don't think we are quite up to those yet...but the fact that you can get 8 years is insane) vs. a 30-year mortgage?
 

 The scenario laid out says NOTHING about what these loans are for, who is taking them out.

Loans for things other than real estate are not typically called "mortgages."

That's true, for some reason I was thinking it just said loan and didn't read back. So let's just stick with the first thing I wrote.  Two people with very different credit will be offered different interest rates.

Or how about - mortgages granted in two different years?  When I look back at our old house's 15 year loan, it's insane what a "good rate" was then.

Or mortgages of two different sizes. A 15-year loan on a more expensive house will have more interest than a 30-year loan on a much less expensive one.

I think it's pretty obviously implied that the only difference between the loans is their term length, since that's the only characteristic mentioned.  It also even says "typically" in the beginning because I'm sure out there somewhere there's an anomaly.

Typically is only used to modify the payments, it doesn't modify the interest.  If they used typically both times I'd agree the question is defensible.

I've spent too much of my life guarding against lawsuits on ill-phrased test questions :)

[Heckler]

6/6

[Scandium]

This can't be real? The only one that i could see the average person NOT getting right the bond question, everything else is basic math....

Though more knowledge is always good, I don't quite see many situations where not knowing the relationship between bond prices and interest rates will hurt the average person. Is bond speculation now something we expect the average person to do? At most they might be putting some money into a bond fund in their 401k. Which they shouldn't change based on prices anyway.

edit:
Another point from the NYT article.
They site as a poor financial decision that "only 24 percent of home buyers paid more than than 20 percent of the purchase price as a down payment [up to 2009]." But with the government gift of 30 year fixed mortgages (and tax deduction!) and relatively low interest putting down just the 20% minimum is the prudent decision!

[NESailor]

tooting my own horn, 100%.

I'll echo someone else's sentiment - the people even taking this is not a representative sample.  I'll forward to my wife to get her vast social network take this and report back with the findings (if any).  Some of her friends are somewhat frugal but she's also got the "still paying off the loan I took out for my 1st wedding but I'm going to finance this RV and lease a truck too" friends.  True story and actually very nice people.  Just not 6/6 on a FINRA test crowd.

[ooeei]

"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."

This certainly seems to depend on what kind of interest rate I could get on either loan.

6 out of 6 though.

What's realistic situation where a 15 year loan would be cheaper than a 30 year loan?

Two different people with vastly different credit taking them out? 
A 15-year car loan (don't think we are quite up to those yet...but the fact that you can get 8 years is insane) vs. a 30-year mortgage?
 

 The scenario laid out says NOTHING about what these loans are for, who is taking them out.

Loans for things other than real estate are not typically called "mortgages."

That's true, for some reason I was thinking it just said loan and didn't read back. So let's just stick with the first thing I wrote.  Two people with very different credit will be offered different interest rates.

Or how about - mortgages granted in two different years?  When I look back at our old house's 15 year loan, it's insane what a "good rate" was then.

Or mortgages of two different sizes. A 15-year loan on a more expensive house will have more interest than a 30-year loan on a much less expensive one.

I think it's pretty obviously implied that the only difference between the loans is their term length, since that's the only characteristic mentioned.  It also even says "typically" in the beginning because I'm sure out there somewhere there's an anomaly.

Typically is only used to modify the payments, it doesn't modify the interest.  If they used typically both times I'd agree the question is defensible.

I've spent too much of my life guarding against lawsuits on ill-phrased test questions :)

I just don't see too many situations happening where a you pay more total interest on a 15 year loan than you do on a 30 year.  Similarly I don't see many situations where the monthly payment is less for a 15 year than a 30.  I get the feeling I'm misunderstanding your issue with the question.

[Spitfire]

6/6, That was easy for us but I know many people who would struggle with it.