Good thing they didn’t ask this question of U.S. congressmen and senators ... it would prove to be embarassing.
I’m sure a lot of them scratched their heads and asked, “what’s that circle dealie with the line separating them?”
OK....I’m stumped.. What’s the answer? /s
I gauge peoples financial literacy by asking if they would pay more for a high yield corporate bond or a low yield corporate bond.
The lower amount is plus 3%, which is 103. Is there a trick to this that I am missing?
This isn’t such an easy question.
Is the interest tax deductible?
What is the term of the loan?
What is the inflation rate?
Are they using the traditional definition of percentage, or the one that the US government uses?
Even if you don't know the answer, how do you get to 16%? Random guessing would lead you to the global average of 49%. The only way to get 16% is if your population is financially illiterate AND really unlucky.
Given there are only two possible answers a totally random sample of monkeys would result in 50% being correct.
where is the test
“The country results ranged hugely. Just 16% of respondents in Yemen answered the question correctly...”
Maybe because it’s against their religion for Muslims to loan or borrow money at interest? They probably never bother to figure out how it works.
The question on inflation may have two correct answers depending upon tax structures - a country with a progressive income tax which remained constant would clearly lower purchasing power.
Copied from the surveys findings report, *’s around the correct answers.
THE SURVEY ASKED FIVE QUESTIONSON FOUR TOPICS (bold denotes correct answer)Standard & Poor’s Ratings Services and McGraw Hill Financialare committed to creating stronger financial markets aroundthe world. We believe there are correlations between financialliteracy, financial access and the strength of markets. Address-ing financial literacy is a key strategy in building stronger, moreaccessible and sustainable markets around the world.
RISK DIVERSIFICATION
Suppose you have some money. Is it safer to put your moneyinto one business or investment, or to put your moneyinto multiple businesses or investments? [one business orinvestment; *multiple businesses or investments*; don’tknow; refused to answer]
INFLATION
Suppose over the next 10 years the prices of the things youbuy double. If your income ALSO doubles, will you be ableto buy less than you can buy today, the same as you can buytoday, OR more than you can buy today? [less; *the same*;more; don’t know; refused to answer]
INTEREST
Suppose you need to borrow $100. Which is the lower amount to pay back: $105 or $100 plus three percent? [105US dollars; *100 US dollars plus three percent*; don’t know; refused to answer]
COMPOUND INTEREST
Suppose you put money in the bank for two years and the bankagrees to add 15 percent per year to your account. Will thebank add MORE money to your account the second year thanit did the first year, or will it add the same amount of money both years? [*more*; the same; don’t know; refused to answer]
COMPOUND INTEREST
Suppose you had $100 in a savings account and the bankadds 10 percent per year to the account. How much moneywould you have in the account after five years if you didnot remove any money from the account? [*more than 150dollars*; exactly 150 dollars; less than 150 dollars; don’tknow; refused to answer]â€
Scored 5 correct, 0 incorrect, 0 don’t know.
Take the quiz at link below:
https://www.mhfi.com/corporate-responsibility/global-financial-literacy-survey
Select the red tab — Take Our Short Quiz — in upper right corner.
Sad that the author considers a percentage question not a math question but a “financial” question.
I am NOT a numbers person. My mind gets dizzy when faced with them. But I decided to read the question -— and got it right immediately. If I can do it — anyone can -— should!
Well, in a large portion of the world, interest is “haram.”