Rule of 72 Quiz

What is the Rule of 72 used for?

• Determining the annual inflation rate

• Estimating the annual GDP growth

• Calculating simple interest

• Estimating the number of years required to double the invested money

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What is the formula to calculate the time period an investment will double?

• 72 / Expected Rate of Return

• 72 * Expected Rate of Return

• 72 + Expected Rate of Return

• 72 - Expected Rate of Return

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Who came up with the Rule of 72?

• Luca Pacioli

• Albert Einstein

• Leonardo da Vinci

• Isaac Newton

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How accurate is the Rule of 72?

• Completely accurate

• Not accurate at all

• Reasonably accurate

• Very accurate

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What is the difference between the Rule of 72 and the Rule of 73?

• The rule of 72 is for rates of return between 6% and 10%, the rule of 73 is for rates outside this range

• The rule of 72 is for simple interest, the rule of 73 is for compound interest

• The rule of 72 is for daily compounding, the rule of 73 is for continuous compounding

• There is no difference between the two rules

What does the Rule of 72 apply to?

• Population growth

• Simple interest rates

• Compound interest rates

• All of the above

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How do you calculate the Rule of 72?

• Add the investment's projected annual return to 72

• Subtract the investment's projected annual return from 72

• Multiply 72 by the investment's projected annual return

• Divide 72 by the investment's projected annual return

What is the Rule of 72 primarily used for?

• Calculating the exact doubling time for an investment

• None of the above

• Estimating the long-term effect of annual fees on an investment's growth

• Determining the annual inflation rate

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How can the Rule of 72 be adjusted for higher precision?

• By dividing 72 by the interest rate

• By adding 1 to 72 for every 3 points the interest rate diverges from the 8% threshold

• By subtracting 1 from 72 for every 3 points the interest rate diverges from the 8% threshold

• By multiplying 72 by the interest rate

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What is the precise formula for calculating the exact doubling time for an investment earning a compounded interest rate of r% per period?

• T = ln(2) / ln (1 + (r / 100))

• T = ln(2) * ln (1 + (r / 100))

• T = ln(2) - ln (1 + (r / 100))

• T = ln(2) + ln (1 + (r / 100))

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