[jeffrey]

It is, or at least it should be, a simple question. You have $200 in an investment that's earning 10 percent a year. Assuming you let the money grow, how much would you have at the end of two years? If you answered $240, you've got plenty of company: in a 2004 survey of American adults, 34 percent gave that answer, which is incorrect, since it ignores the principle of compound interest. In fact, that $200 investment would earn $20 during year one and $22 in year two (on the larger balance). That totals $242—which only 18 percent of adults answered correctly. (The rest gave even worse incorrect answers or copped out.) While it may seem like a trivial exercise, research shows that people who can answer questions like these do better at planning for retirement, saving and managing their debts.

Clues for the Clueless | Newsweek Newsweek | Newsweek.com