Financial IQ Test

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Test Your Financial IQ.

How smart are you when it comes to money? Why not test yourself with our Financial IQ test:

Question 1:
Your evil twin hijacks your life for a year and spends with wild abandon. When you eventually get your life back, you owe £15,000 on 3 credit cards: £8,000 on your Havoc-Card at 17% APR. £5,000 on your Chaos-Card at 27% APR. £2,000 on you Plague-Card at 0% APR. You figure that you can afford to repay £2,000 per month. In which order do you pay off the cards?
a)	Havoc, Chaos, Plague
b)	Plague, Chaos, Havoc
c)	Chaos, Havoc, Plague

Question 2:
You have £10,000 invested tax free at 5% per annum. You reinvest the interest every year. How long will it take for the value of your investment to double?
a)	8 years
b)	10 years
c)	14 years

Question 3:
In which circumstances is it best to borrow money? Assume the loan is for 5 years and that inflation/deflation and APR are constant.
a)	2% inflation, 7% APR.
b)	15% inflation 20% APR.
c)	5% deflation 0% APR.

Question 4:
In which circumstances is it worst to borrow money? Assume the loan is for 5 years and that inflation/deflation and APR are constant.
a)	2% inflation, 7% APR.
b)	15% inflation 20% APR.
c)	5% deflation 0% APR.

Question 5:
Inflation is running at 3%. You are buying a motorcar for £15,000. The salesman offers you three choices. Which is the cheapest deal for you?
a)	0% APR for 5 years.
b)	10% discount for a cash purchase.
c)	£1000 cash back and 5% APR for 5 years.

Question 6:
The interest rate as set by the Bank of England is 6%. Assume this to be constant. A wealthy financier dies and mentions you in her will. You must make a choice. Which of the following options is the most beneficial to you?
a)	A lump sum of £100,000.
b)	£300 per month for the rest of eternity.
c)	£10,000 per year for the next 12 years.

Question 7:
You really want that house but it's a bit pricey. After shopping around, the best deal you can get is a fixed rate mortgage at 8%. You can't afford the mortgage repayments if you take a 25 year mortgage. Your banker suggests a 50 year mortgage. By approximately how much would this decrease your monthly payments?
a)	50%
b)	28%
c)	12%

Interestingly at the height of the property bubble in Japan, 100 year mortgages were being granted!!!

Question 8:
The economy is experiencing 10% deflation. Your friend needs to borrow £1,000 and has promised to repay you in 12 monthly installments. If, in buying power, you were to get back exactly what you lent, what would the monthly installments have to be?
a)	£87
b)	£83
c)	£79

Question 9:
You have a variable rate mortgage at 4%. Interest rates increase by 2% to 6%. By what percentage do your monthly repayments increase?
a)	2%
b)	12%
c)	22%

Question 10:
You have a variable rate mortgage at 15%. Interest rates increase by 2% to 17%. By what percentage do your monthly repayments increase?
a)	2%
b)	12%
c)	22%

Question 11:
It is 2004, you invest £5,000 in a 20 year corporate bond paying 4% interest per annum and scheduled to mature in 2024. At maturity £5,000 capital will be repaid. There is a currency raid on the pound and the Bank of England responds by increasing interest rates from 4% to 8%. How much is your investment worth now?
a)	5,800
b)	4,300
c)	3,000

Question 12:
You have a 25 year mortgage for £100,000 fixed at 5%. Your repayments are £585 per month. If you were to pay an extra £58 per month , how many years early would you clear the mortgage?
a)	1 year
b)	4 years
c)	7 years

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