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Monday, May 4, 2015

A Brief Money Quiz

It is Monday so time for a fun little quiz about money..

1)  According to a survey done by USA Today, what percentage of Americans do not put away Any savings for emergencies?

A -- 5%
B -- 15%
C -- 25%
D -- 35%

Answer:  C   25%

2)  A general banking account pays on average how much interest yearly on deposits?

A --  between 2% to 2.15%
B --  between 1% to 1.75%
C -- between 0.10% to 0.25%
D -- between 0.02% to 0.05%

Answer:  C   between 0.10% to 0.25% interest

3)  Let's say you have $50,000 in a savings account and you are receiving 0.25% interest for 12 months without taking a penny out, how much total interest will you accrue in a calendar year?

A -- $125.14 in interest
B -- $109.55 in interest
C -- $528.99 in interest
D -- $545.70 in interest

Answer -- A  $125.14 in interest

4) When a bank holds your money, it allows them to lend out 10x through a banking concept called fractional reserve lending.  So that $50k held by a bank in Question #3 means it can lend out $500k.

Here's the question-- if the bank lends out that $500k to someone in the form of a 30 year mortgage at 4.5% interest, how much money in interest will the bank receive once the loan is fully repaid?

A -- $ 65,800 in interest
B -- $145,552 in interest
C -- $412,033 in interest
D -- $501,300 in interest

Answer --  C    So the bank holds onto your $50k and pays you $125.14 which isn't enough for 2 weeks' groceries, then through fractional reserve banking, lends out $500k and generates $412,033 in profit for the bank over the life of the loan..

5)  Lastly, according to the New York Times, the “typical American household” is now worth what percentage less than it was worth a decade ago?

A -- 17%
B -- 36%
C -- 39 %
D -- 61%

Answer --  B  The typical household is worth 36% less today vs 10yrs ago.

Thank God for credit, ehh?