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The Mystery of Time and Compound Interest - Quiz

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In this experiment's comparison, the main reason 'Early Bird' Xiao Ming ultimately wins is:

The Mystery of Time and Compound Interest - Quiz - Quiz Questions

Test your understanding of investment timing, compound interest effects, and core principles of long-term financial planning.

1. In this experiment's comparison, the main reason 'Early Bird' Xiao Ming ultimately wins is:

A. He invested more total principal than Xiao Hong
B. He chose a higher annual return rate than Xiao Hong
C. He started investing earlier, giving him a longer compound interest accumulation period
D. He invested for more years than Xiao Hong

2. In the compound interest formula $A = P(1 + r)^n$, the key exponential variable that determines 'how fast wealth doubles' is:

A. $A$
B. $P$
C. $r$
D. $n$

3. [Calculation] If the annual return rate is $7.2\%$, according to the 'Rule of 72', approximately how many years will it take for your wealth to double?

A. $5$ years
B. $10$ years
C. $20$ years
D. $72$ years

4. To catch up with Xiao Ming (who started $10$ years earlier), the late-starting Xiao Hong typically needs to pay:

A. The same amount of principal
B. About $1.5$ times the principal
C. About $3$ times or more principal
D. No extra principal needed, just luck

5. If we want to investigate 'the effect of return rate on wealth accumulation speed,' which of the following variables should be a control variable (kept unchanged)?

A. The final total wealth
B. The annual return rate value
C. The annual contribution amount and investment duration
D. The experimenter's mood

6. Regarding the compound interest curve (wealth changing over time), which description is accurate?

A. An upward straight line
B. Flat in the early period, almost vertical upward in the later period—an exponential curve
C. A wavy fluctuating curve
D. A smoothly declining curve

7. [Calculation] Xiao Fang invests $10,000$ annually for $2$ consecutive years at a $10\%$ annual return rate. What is her account total at the end of Year $2$ (including Year $2$ interest)?

A. $20,000$
B. $21,000$
C. $23,100$
D. $12,100$

8. The most core piece of financial advice from this experiment is:

A. Work hard to earn money, invest more later
B. Look for high-risk projects with $50\%$ annual returns
C. Start early and harness the power of time
D. Save but don't invest, because compound interest is unreliable

9. In which of the following scenarios might compound interest bring negative consequences?

A. Buying and holding index funds long-term
B. Credit card bills overdue, with compounding late fees
C. Depositing in fixed-term savings accounts
D. Participating in a company pension plan

10. True or False: To benefit from compound interest, investors must periodically withdraw interest and re-deposit it once earnings reach a certain level.

True
False