Financial Literacy Flashcard

Suppose you have $100 in a savings account earning 2 percent interest a year. After five years, how much would you have?

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?

If interest rates rise, what will typically happen to bond prices? Rise, fall, stay the same, or is there no relationship?

True or false: Buying a single company's stock usually provides a safer return than a stock mutual fund.

Which of the following indicates the highest probability of getting a particular disease?
Options:

• There is a one-in-twenty chance of getting the disease

• 2% of the population will get the disease

• 25 out of every 1,000 people will get the disease

What is one way to potentially reduce your taxable income? Options: Claim the standard deduction twice, Delay filing your tax return, Contribute to a retirement account such as 401(k), Pay off your credit card balance

What’s the purpose of a W-4 form?