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Thread: Do you understand money?
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05-12-2014, 02:05 PM #1
Do you understand money?
http://www.theatlantic.com/internati...d-money/361851
Do you understand money? Let’s see how well you do with the following questions.
1. Suppose you had $100 in a savings account and the interest rate was 2 percent per year. After five years, how much do you think you would have in the account if you left the money to grow? A) more than $102; B) exactly $102; C) less than $102; D) do not know; refuse to answer.
2. Imagine that the interest rate on your savings account is 1 percent per year and inflation is 2 percent per year. After one year, would you be able to buy A) more than, B) exactly the same as, or C) less than today with the money in this account?; D) do not know; refuse to answer.
3. Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.” A) true; B) false; C) do not know; refuse to answer.
The correct answers are 1-A; 2-C; and 3-B.
How did you do? Did you respond correctly to all three questions? If you did, then you belong to a surprisingly small global minority.
In Russia, 96 percent of those surveyed could not answer the three questions correctly. While that might be expected of a post-communist nation, the mecca of capitalism didn’t exactly yield glowing results—only 30 percent of Americans aced the quiz. The best-performing respondents were the Germans (53 percent got a perfect score) and the Swiss (50 percent), but this still leaves almost half of each country’s population without a basic understanding of financial matters. In countries with relatively strong economies, the numbers are sobering: 79 percent of Swedes, 75 percent of Italians, 73 percent of Japanese, and 69 percent of French could not respond correctly to all three questions.
So how did you do?
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05-12-2014, 02:30 PM #2
In Russia, question worded differently.
1. Suppose you have 100 rubles in savings account and interest rate 2 percent per year. After five years, how much you have in account if money left to grow? A) more than 200 rubles, you help Vladimir Putin ; B) exactly 102 rubles; C) less than 102 rubles; you pay off local police to not arrest son D) do not know; bank no longer in business.
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05-12-2014, 02:31 PM #3
Aced it.
The first two questions really should list how often the interest compounds. If you adjust things just right the answer could be any of the above for #2. ie if the interest in #2 compounds instantaneously, and inflation is compounded once annually, you end up with P(e-(1+i)) or something like that, where P is the principal, e=2.718....=Eulers number, and i is the inflation rate.
That should also tell you that I didn't get laid this weekend.Originally Posted by Smoke
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05-12-2014, 02:36 PM #4
I always need a translator.
Johnny's only sin was dispair
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05-12-2014, 02:48 PM #5
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05-12-2014, 02:48 PM #6
Here, I translated it for you:
1. If the bank compounds monthly, I would end up with $10.51 in interest. If I were so stupid to leave it in there at 2%. Two fucking percent??, Motherfuckers? Shit, you can't even get a decent hooker, let alone blow for $110 and 51 fucking cents.
2. 1% interest??? Not even gunna answer that one. I'd pull my money and open a Check Cashing bidness. Gunna make like 50% a week.
3. Mutual funds are for pussys. Didn't you hear I'm gunna open a Check Cashing bidness?Living vicariously through myself.
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05-12-2014, 03:03 PM #7Funky But Chic
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What's the service charge on the savings account?
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05-12-2014, 03:06 PM #8
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05-12-2014, 03:18 PM #9
There is no mention of there being a test in the post header.
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05-12-2014, 03:37 PM #10
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05-12-2014, 03:56 PM #11
Stupid Russians.
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05-12-2014, 04:01 PM #12
Money is a human construct, it's not real.
Zone Controller
"He wants to be a pro, bro, not some schmuck." - Hugh Conway
"DigitalDeath would kick my ass. He has the reach of a polar bear." - Crass3000
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05-12-2014, 04:03 PM #13Registered User
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So you should open a bank that caters to Russians. Easy money.
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05-12-2014, 04:05 PM #14
i guess this means I are smarter then 96% of ruskies and 70 % of 'merkins.
I are really smart.
I agree it is a constitutional right for Americans to be assholes...its just too bad that so many take the opportunity...iscariot
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05-12-2014, 04:21 PM #15
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05-12-2014, 04:29 PM #16Good-lookin' wool
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05-12-2014, 05:01 PM #17
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05-12-2014, 05:32 PM #18
Goddamn, mericans are dumb.
"4ply is so quiche"
-Flowing Alpy
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05-12-2014, 05:52 PM #19
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05-12-2014, 06:06 PM #20
Wolf of Wall Street in Moscow anyone?
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05-12-2014, 06:07 PM #21Registered User
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Really odd quiz. Using his phrasing, I guess the takeaways are:
1) Interest gives you more
2) Savings accounts let you buy less
3) Mutual funds are safer
Hey honey, that savings acct is screwing us! We better go invest in a mutual fund!
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05-12-2014, 06:58 PM #22
The title really needs to be changed to "Do you understand basic Finance and investing- using it for lending and borrowing as the quiz questions ask really - money is nothing more in today's society than goverment declared legal tender for payment for goods and services and repayment of debts.
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05-12-2014, 07:21 PM #23Hugh Conway Guest
I don't understand why my fucking dog likes to fucking eat the stuff.
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05-12-2014, 08:54 PM #24
Like most Americans I just spend my money on cheap, poorly made consumables so this whole "compound interest" thing is of little interest.
"These are crazy times Mr Hatter, crazy times. Crazy like Buddha! Muwahaha!"
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05-12-2014, 08:57 PM #25
I fucked up the equation (e is for i=100%), but the theory holds true. Without looking it up, I think you take the limit of the compounding interest formula as the number of periods approaches infinity and my gut feeling is that you end up greater than 1.02 for a compound factor.
I'm ok with being proven wrong, but show merge math if that's the case.
If it doesn't work at 0.01 and 0.02, it will eventually get there if you incrementally increase both the interest and inflation rates.Originally Posted by Smoke
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