Are Young People Financially Illiterate? (QUIZ)

According to a new study from the University of Michigan Retirement Research Center, young people are ill-equipped to deal with the financial burdens present for most adults. From student loans and credit cards to investments and 401(k)s, recent college graduates are lost in a sea of business information.

The study showed that less than a third of people between ages 23 and 28 could define interest rates, inflation and risk diversification. The National Council on Economic Education has been attempting to reverse this trend for years, though the results are not immediately visible.

HuffPost Impact thinks that if America is to avoid reliving our current financial crisis, it behooves all of us to have a basic knowledge of markets and finances. To this end, we've put together a quick quiz (partially adapted from a quiz by the U.S. Securities and Exchange Commission) to test your knowledge of modern economics and the business world. See how you do! (but don't be too hard on yourself):

Are You Financially Literate?

1) If you are buying stock in a company, that company is required to: *

Provide you a five-year prediction of profits

Advise you on diversifying your portfolio

Send you free products

Disclose prior financial information

2) If you own stock in a company, and the stock's price rises from $15 to $20, that is called a *

Capital Gain

Free Market

Depreciation

Compound

3) The benefit of having a traditional 401(k) plan is: *

It allows increased access to health care

You can make withdrawls whenever you want

Added income is not taxed

You're guaranteed $401,000 at retirement

4) If you have employee stock options, the strike price is: *

The price at which the stock will be purchased when the option is exercised

Dependent on the number of shares available

The price each share would be worth if the company had 10 employees

The maximum amount an individual can pay post-dilution

5) What is diversification? *

Buying as many shares as possible during the first month of actionability.

Investing in a high-risk company, as would a hedge fund.

Making a variety of investments (i.e. stocks, bonds and mutual funds) to provide less risk.

Selling a portion of one's stock every quarter in order to measure profits.

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