Financial IQ: Test Your Basic Financial Knowledge With This 10 Question Money Quiz

All of us think we know a thing or two about money, but really how good is your financial knowledge? Take this quick quiz to get a gauge of where you stand when it comes to basic financial concepts (answers and ratings are at the end).

Q1: Sam earns $2,500 per month working at Home Depot. Who pays the contributions to Social Security on the wages he earns?

A. Only Sam
B. Only Home Depot, his employer
C. Both Sam and Home Depot
D. The government makes all the contributions

Q2: What is currently the highest federal (IRS) tax rate in the American personal taxation system?

A. 15%
B. 37%
C. 39.5%
D. 51%

Q3. What does the acronym APR stand for? It is used when comparing credit card rates, high yield savings or money market accounts to see which provides the best comparable return.

A. Annual Percentage Rate
B. Average Principal Return
C. Average Percentage Rate
D. Amazing Personal Return

Q4. The type of cereal Joe likes comes in three different brands and three different size boxes. To select the brand and the box with the lowest unit cost, he should look at the:

A. Largest box of cereal on the shelf
B. Price per ounce of cereal in each box
C. Most popular brand of cereal
D. Look in another store

Q5. The largest single factor that affects your credit score is:

A. The length of my credit history
B. Amount of debt you owe
C. Marital Status
D. Whether you pay bills on time

Q6. Which option best describes the relationship between the interest rate on a loan and the risk of nonpayment?

A. Lower interest rates are charged on loans with a lower risk of nonpayment
B. Higher interest rates are charged on loans with a lower risk of nonpayment
C. Lower interest rates are charged on loan with a higher risk of nonpayment
D. There is no relationship

Q7. What is the biggest difference between a 401K Plan and an Individual Retirement Account (IRA) ?

A. The investments you can choose from- mutual funds, stocks or bonds
B. The government’s treatment of taxes
C. Fees and Charges
D. One is provided by an employer, the other is not (self-managed choices)

Q8. Carol has $5,000 saved up in her checking account. She puts her money in a high yield savings account that pays 4% a year in interest. How much money in total will be in her account at the end of the year (as an extra test calculate how much she would receive in the second year, assuming the same rate of interest)

A. $4,800
B. $5,000
C. $5,200
D. $5,400

Q9. While driving, Marcus got distracted talking to his friend in the car and hit a street sign. No one was hurt in the accident, but the front end of the car was damaged. What type of automobile insurance coverage will cover damages to his car?

A. liability
B. collision
C. comprehensive
D. home

Q10. How many shares are normally associated with an option contract?

A. 1
B. 10
C. 100
D. 1000


1. C – Social security contributions are made by BOTH the employee and employer. You can see the SSI limits and income thresholds here.
2. B – Refer to the IRS tax bracket table for all the tax rates and income brackets. There is however talk of this increasing to 39.5% under the Biden Tax Plan.
3. A – Annual Percentage Rate. It is the annual all-in cost of a loan (including fees). Sometimes referred to as the APY, or annual percentage yield.
4. B.
5. D
. Paying bills on time is 35 percent, outstanding debt is 30 percent, length of credit history is 15 percent. New credit inquiries and applications are about 10 percent. Other factors make up the rest.
6. A. Typically a person’s credit score is used to assess their risk of non-payment. So all other things being equal, the higher the credit score of a person, the lower the interest rate they can get.
7. D. There are various differences but this is the most notable one. Roth IRA plans are the third popular form of retirement accounts, with the main difference in this retirement plan being that contributions are taxed when going in, but tax free on withdrawal.
8. C. 5000*1.04 = $5200. In the second year, she would receive $5200*1.04 = $5408.  Earning interest on past interest, shows the power of compounding (return is 9% on original sum, vs 8% if we started with 5000 every year).
9. B
10. C. When you buy a put or call option you receive the right to buy 100 shares (call option) or take the obligation to sell 100 shares (put option)

Your Financial IQ – Analysis

High : 9-10 – You have a great understanding of basic financial concepts. On to more advanced items.

Medium : 6-8 : Decent, but could be better. With a little work you can be become easily improve your financial savvy

Low : 3-5 : Needs some work and I suggest you peruse a few basic personal finance concepts, books or checking out some finance web sites to grow your knowledge

Poor : 0-2. You seem to have little idea of basic financial concepts and really need to get your act together. I suggest taking a course, checking out some personal finance articles on this site and even getting some help from a financial professional

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2 thoughts on “Financial IQ: Test Your Basic Financial Knowledge With This 10 Question Money Quiz”

  1. I have no clue about investment where money is concerned. I would really like some insight in that department ..


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