QUESTION #1. If you deposit $1,000 in a savings account with a fixed annual interest rate of 5%, how much will you have in your account after two years (assuming you make no additional deposits or withdrawals)?
A. exactly $100
B. exactly $1,100
C. less than $1,100
D. more than $1,100
QUESTION #2. Person A adds $250 to her mutual fund every year for 10 years. Person B decides to wait 10 years when he knows he will have a lump sum of $2,500 to invest in a mutual fund. If both individuals earn, on average, a 7 percent rate of return, who will have the larger mutual fund balance in 20 years?
A. Person A, because she saved little each year
B. Person B, because his starting amount is bigger than Person A’s savings
C. Person A, because her money has grown for a longer time at compound interest
D. They would have the same amount because they invested the same amount of money
Check out Charles Schwab’s website to see more sample questions.
How well did you do? These are just some of the 35 questions that America’s high school students are being asked to answer by the U.S. Treasury Department, President’s Advisory Council on Financial Literacy, and in conjunction with Charles Schwab Foundation, a private, nonprofit organization funded by The Charles Schwab Corporation, the financial services powerhouse as part of the Fall 2008 National Financial Literacy Challenge.
Teachers can sign up their students at the U.S. Treasury website. The Challenge will be administered November 3rd through December 12th. Winners will be announced in December. Over 46,000 students took the inaugural Challenge during the spring of 2008, and 10 teenagers who achieved scores of 100 percent were awarded scholarships by the Charles Schwab Foundation. The foundation will award scholarships of $1,000 each to 100 students who get a score of 100% and will also award $1,000 to the student’s school or organization that contributed to the their financial education.