The ABCs of the 123s

Finance is a complicated topic to understand. The jargon and math don’t help. Top employees of Lebanese lending institutions have admitted to Executive that even some bankers cannot define an annual percentage rate (APR). Look it up on Wikipedia, and you’ll no doubt be researching more new terms (such as nominal APR and effective APR) before you finish reading the first sentence. Financial literacy is not a global strong-suit. Surveys from 2011 conducted by researchers with the non-profit, US-based National Bureau of Economic Research asked residents of Germany, Italy, Japan, the Netherlands, New Zealand, Russia, Sweden and the United States three short questions designed to assess respondents’ ability to calculate interest rates, understand inflation and understand risk diversification. Only in Germany did more than 50 percent of those surveyed answer all three questions correct. In all eight countries, at least 10 percent of respondents got all three wrong. Financial literacy