Outlook Money Quiz

Advanced Financial Literacy Quiz


1. Function of Stock Market Which of the following statements describes the main function of the stock market?

a. The stock market helps to predict stock earnings
b. The stock market results in an increase in the price of stocks
c. The stock market brings people who want to buy stocks together with those who want to sell stocks
d. None of the above
e. Don't Know
f. Refuse
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2. Knowledge of Mutual Funds Which of the following statements is correct?

a. Once one invests in a mutual fund, one cannot withdraw the money in the first year
b. Mutual funds can invest in several assets, for example invest in both stocks and bonds
c. Mutual funds pay a guaranteed rate of return which depends on their past performance
d. None of the above
e. Don't Know
f. Refuse
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3. Relationship Between Interest Rates and Bond Prices If the interest rate falls, what should happen to bond prices?

a. Rise
b. Fall
c. Stay the Same
d. None of the above
e. Don't Know
f. Refuse
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4. Risk Diversification: Company Stock or Mutual Fund? True or false? Buying a company stock usually provides a safer return than a stock mutual fund.

a. True
b. False
c. Don't Know
d. Refuse
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5. Riskier: Stocks or Bonds True or false? Stocks are normally riskier than bonds.

a. True
b. False
c. Don't Know
d. Refuse
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6. Long Period Returns Considering a long time period (for example 10 or 20 years), which asset normally gives the highest return?

a. Savings accounts
b. Bonds
c. Stocks
d. Don't Know
e. Refuse
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7. Highest Fluctuations Normally, which asset displays the highest fluctuations over time?

a. Saving accounts
b. Bonds
c. Stocks
d. Don't Know
e. Refuse
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8. Risk Diversification: Spreading Money Among Different Assets When an investor spreads his money among different assets, does the risk of losing money:

a. Increase
b. Decrease
c. Stay the same
d. Don't Know
e. Refuse
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FINANCIAL LITERACY: AN ESSENTIAL TOOL FOR INFORMED CONSUMER CHOICE?(Click here to read full paper)

Extracted from:
NBER WORKING PAPER SERIES
FINANCIAL LITERACY:
AN ESSENTIAL TOOL FOR INFORMED CONSUMER CHOICE?
Annamaria Lusardi
Working Paper 14084
http://www.nber.org/papers/w14084
NATIONAL BUREAU OF ECONOMIC RESEARCH
1050 Massachusetts Avenue
Cambridge, MA 02138
June 2008