1. Suppose you have $100 in a savings account earning 2 percent interest a year. After five years, would you have more than $102, exactly $102 or less than $102?
Less than $102
Exactly $102
More than $102
Don't know
2. Imagine that the interest rate on your savings account is 1 percent a year and inflation is 2 percent a year. After one year, would the money in the account buy more than it does today, exactly the same or less than today?
More than it does today
Exactly the same
Don't know
Less than today
3. If interest rates rise, what will typically happen to bond prices? Rise, fall, stay the same, or is there no relationship?
Fall
Rise
No relationship
Stay the same
Don't know
4. True or false: 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.
True
False
Don't know
5. True or false: Buying a single company's stock usually provides a safer return than a stock mutual fund.
True
False
Don't know
