Question

Researchers at some of the nation’s leading universities have been studying financial literacy for years. Results from their work provide interesting insights into the financial capabilities of the average American. Their findings are a bit sad. The average American is, well, basically a “C” student when it comes to financial issues— and we are talking about adults! What follows are a number of questions that these researchers asked survey participants to think about. See if you can beat the national averages for correct and incorrect responses!

If the chance of getting a disease is 11%, how many people out of 1,200 would be expected to get the disease?

The expected number of people out of 1,200 to get the disease is

If 4 people all have the winning number in the lottery and the prize is $2.4 million, how much will each of them get?(Round answers to 0 decimal places, e.g. 5,275.)


Each of them will get $

Let’s say you have $210 in a savings account. The account earns 10% interest per year. How much would you have in the account at the end of 4 years? (Round answers to 0 decimal places, e.g. 5,275.)


At the end of 4 years the balance in the account will be $

Suppose you had $290 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow: more than $296, exactly $296, or less than $296?

The balance in account after 5 years will be

Imagine that the interest rate on your savings account is 1% per year and inflation is 2% per year. After 1 year, would you be able to buy more than, exactly the same as, or less than today with the money in this account?

After 1 year you would be able to buy (more than, exactly the same, less than)  today with the money in this account.

Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.”

The given statement is (true or false)

Answer 1

1. Chances of getting a disease = 11%

Number of people = 1200

Number of people who can get the disease = (1200*11)/100 = 132 people

2. Number of people who have winning lottery numbers= 4

Lottery amount = $2.4 million

Lottery amount each person gets = $2.4 m/4 = $0.6 million

3. Amount in your bank account = $210

Interest rate = 10%

Amount in the bank after 4 years = 210 +Interest

Where Interest = (4*10*210)/100 = $84

Total amount = $210 +$84 = $294

4. Similarly, Number of years = 5, Principal amount = $290, Rate = 5%

Total Amount after 5 years = $290 + ((2*5*290))/100)

=$319 which is more than $296

5. Since the amount you are earning as interest is 1% but prices are growing at 2%, so you'll be able to buy less than today.

6. False, buying a single company is much risky as all your investment's future is dependent on performance of that company however if you buy a mutual fund, you invest in a lot of companies so your investment is much safer.