Q 01/05

Which effect turned Benjamin Franklin's £1,000 gift to Boston into almost $5 million over 200 years?

A) Simple interest

B) Compound interest

C) Rising land values

D) Currency exchange

Answer · why

B) Compound interest

Compound interest did the work: Franklin's will put the money in trust to gather interest for two centuries. His matching gift to Philadelphia had pas...

Q 02/05

Which agency, created after a third of US banks failed, insures deposits up to $250,000?

A) FDIC

B) FINRA

C) SEC

D) IRS

Answer · why

A) FDIC

The FDIC was set up by the Banking Act of 1933 to end bank runs. Its cover applies per depositor at each insured bank, so money spread across two bank...

Q 03/05

Which investing principle is summed up by the proverb about not putting all your eggs in one basket?

A) Market timing

B) Speculation

C) Dollar-cost averaging

D) Diversification

Answer · why

D) Diversification

Diversification spreads money across different investments so that one collapse cannot sink the whole portfolio. The catch is that juggling too many b...

Q 04/05

Which US pay rule started at just 25 cents an hour under the Fair Labor Standards Act of 1938?

A) Living wage

B) Overtime pay

C) Minimum wage

D) Prevailing wage

Answer · why

C) Minimum wage

Minimum wage law at first covered only employees tied to interstate commerce. Amendments in the 1960s stretched it to large shops, service firms and g...

Q 05/05

Which fraud, used by Bernie Madoff, pays early investors with money taken from newer ones?

A) Pyramid scheme

B) Pump and dump

C) Ponzi scheme

D) Advance-fee scam

Answer · why

C) Ponzi scheme

A Ponzi scheme takes its name from Charles Ponzi, who in 1920 promised huge profits from trading postal reply coupons and simply paid old investors wi...