The Financial Literacy Quiz

As of February 2022, the CPI was 7.9% year-over-year, the highest rate of inflation since 1982.

After six years, you’d have about $112.62. When you earn compound interest, the interest gets added to the principal amount invested or borrowed, and then the interest rate applies to the new (larger) principal.

 If the inflation rate is higher than your interest rate, your money will lose value in that account.

It’s standard to put down 20% on the total price of a house. Twenty percent of $400,000 is $80,000.

With a 15-year mortgage, your monthly payments will likely be higher than those of a 30-year mortgage. Overall, however, you’d spend less in interest on a 15-year mortgage, and get paid off more quickly. 

 A credit score can range from 300 to 850. The better your credit, the higher your score. Perfect credit is 850.

 The Fed has kept the benchmark rate near 0% since the beginning of the pandemic. In March, the Fed raised the rate to between 0.25% and 0.50% to combat inflation.

The benchmark rate tends to dictate interest rates for people borrowing money. So when the benchmark rate goes up, mortgage rates also tend to increase.

 Investing some of your money in a diversified portfolio gives your money a chance to grow more than it might in a traditional savings account, potentially outpacing inflation over time.

Dividends are shares of a company’s profits, which are paid to its shareholders in proportion to the number of shares they own. To find the dividend amount, take the dividend per share amount and multiply by the number of shares. 

 If you earn $75,000, and your employer matches up to 3% of your 401(k) contributions, your employer will contribute up to $2,250 per year.