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Table 10 Box 1: Extract from OECD (2016, p 84) on calculation of financial knowledge score. The financial knowledge score is computed as the number of correct responses to the financial knowledge questions, according to Table 1. It ranges between 0 and 7 (it is also possible to replicate the 8-point score created in 2012 for countries using QK2 by adding the additional response)

From: A comparative analysis of the OECD/INFE financial knowledge assessment using the Rasch model

Topic Question number Toolkit
Time-value of money QK3a Now imagine that the <brothers> have to wait for one year to get their share of the $1,000 and inflation stays at <X> percent. In one year’s time will they be able to buy
Interest paid on a loan QK4 You lend $25 to a friend one evening and he gives you $25 back the next day. How much interest has he paid on this loan?
Interest plus principal QK5 Suppose you put $100 into a <no fee, tax free> savings account with a guaranteed interest rate of 2% per year. You don’t make any further payments into this account and you don’t withdraw any money. How much would be in the account at the end of the first year, once the interest payment is made?
Compound interest QK6 and how much would be in the account at the end of five years [add if necessary: remembering there are no fees or tax deductions]? Would it be
Risk and return QK7a An investment with a high return is likely to be high risk
QK7a (alt) If someone offers you the chance to make a lot of money it is likely that there is also a chance that you will lose a lot of money
Definition of inflation QK7b High inflation means that the cost of living is increasing rapidly
Diversification QK7c It is usually possible to reduce the risk of investing in the stock market by buying a wide range of stocks and shares
Q7c (alt) It is less likely that you will lose all of your money if you save it in more than one place
  1. aThis is multiple response and very context specific, and so the 2015 question includes an indicator of the rate of inflation
  2. b1 for correct responses [‘3’, unless the country indicates otherwise; or ‘4’, if mentioned spontaneously]. 0 in all other cases
  3. cQK6 is a multiple-response question; there are four options given. In order to take into account some of the potential for guessing the answer to this question, the score is based on a derived variable that filters out those respondents that could not calculate simple interest at QK5