Young adults are lacking when it comes to financial literacy, according to a new study from San Diego State University.
Only a quarter of American 20-somethings answered three questions measuring basic financial knowledge correctly.
Here are the questions:
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.
Suppose you had £100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow: More than £102, exactly £102, or less than £102?
Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, would you be able to buy more than, exactly the same as, or less than today with the money in this account?
However, the study concluded there was little to no effect of financial knowledge on financial behaviour. Younger people manage money poorly, even when they know better.
(Scroll down for the answers)
*2. More than £102.*
*3. Less than today.*
Note: The currency used in the study has been changed from dollars to pounds.