S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods. Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable. ABOUT BORROWING AND LENDING. In the United States, many people engage in short-term borrowing. They use credit cards to acquire goods or services – springing for a dinner out, charging the cost of a new video game, or purchasing a replacement refrigerator. Then, they pay the money back. If the credit cardholder doesn’t reimburse the card provider in full each month, then they will owe interest on the money they’ve borrowed. Buying on credit is fast and convenient, and it can be quite profitable for the lender. In China, the payment system can work differently. It’s more of a “pay now and buy later” approach where buyers lend their money to companies, reported The Economist. “When you get a haircut or eat at a restaurant, the seller encourages you to pay in advance for multiple transactions. You might pay upfront for ten haircuts, or put 1,000 yuan ($140) on a pre-paid card, and the business will, in return, give you extra credit to spend… The bonus the firm adds to the customer’s deposit rises with the size of the initial outlay, and can be large. Customers putting down 10,000 yuan can receive an extra 2,000 yuan to spend in the store. If they use the money within a year, that amounts to an annual “interest” rate of 20 [percent], paid in kind.” See what you know about borrowing and lending by taking this brief quiz. 1) If the Chinese system seems familiar, it may be because it’s similar (in some ways) to gift cards. In 2024, Americans spent more than $300 billion on gift cards, according to a source cited by Charles Passy of MarketWatch. However, many Americans don’t use the gift cards they receive. That can make gift cards very profitable for companies. In 2024, a popular coffee retailer reported it had a significant amount of money stored in unredeemed gift cards and did not expect most of the cards to ever be redeemed. How much money was it? A) $379 million B) $985 million C) $1.77 billion D) $4.56 billion 2) When people buy bonds, they agree to lend their money to a government or organization. In return, the government or organization agrees to repay the loan and pay a specific amount of interest. Imagine that you lend your child $2,000 to buy a car. In exchange, they promise to repay you $200 a month (until the debt is repaid) and to mow your lawn every week. In this example, the lawn mowing would: A) Probably never happen. B) Represent the repayment of principal. C) Represent the payment of interest on the loan. D) Be your reward for being a wonderful parent. 3) A credit score offers insight to a person’s financial circumstances at a specific time, and helps financial institutions decide whether to lend to a person or not. The practice began in 1989 when the first credit-scoring algorithm was created. How many credit scores can a person have? A) One B) Three C) Fourteen D) Hundreds 4) When people buy homes, the mortgage rates received are based on a specific benchmark. When the benchmark rate is higher, so is the mortgage rate. What is the benchmark for the 30-year mortgage rate? A) The 5-year average return of the Standard & Poor’s 500 Index B) The Federal Open Market Committee federal funds rate C) The 10-year U.S. Treasury note rate D) The Big Mac Index Weekly Focus – Think About It “The pleasure of rooting for Goliath is that you can expect to win. The pleasure of rooting for David is that, while you don’t know what to expect, you stand at least a chance of being inspired.” – Michael Lewis, Author Answers: 1) c; 2) c; 3) d; 4) c | 
