How Financially Literate Are You?

8:02 AM, Sep 19, 2011   |    comments
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Columbia (WLTX) -- How financially literate are you? Take the quiz to find out.

Fee-only, Certified Financial Planner Laura Scharr-Bykowsky joined the News19 morning crew to share the quiz.

Financial Health Quiz:

1. Do you have an emergency fund of at least three months' living expenses?

2. Do you follow a monthly budget?

3. Are you contributing at least 10% to your retirement fund at work?

4. Do you have a will?

5. How regularly do you shop around for the best insurance quotes?

6.Do you check you credit report annually?

If you answered no to 1-2 questions : B

If you answered no to 3 of the above questions: C

If you answered no to 4 or more: D

If you answered no to more than 4: F

True or False?

1. A bear market is a period of time in which stock prices move upward. (FALSE; stocks move downward during bear markets)

2. An equity is a stock or any other security, like a mutual fund representing an ownership interest. TRUE

3. When interest rates rise the prices of bonds increase.

FALSE; they decrease. Rates are at historic lows, so bonds may have limited potential going forward.

4. Yield is the income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment's cost. TRUE

5. Fiscal Policy is actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates. FALSE; this is the definition of monetary policy.

6. Quantitative Easing- monetary policy used to increase the money supply. The Federal Reserve buys government securities thereby increasing the money supply and decreasing interest rates to improve lending and liquidity.

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