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Test your basic knowledge |
DSST Money And Banking
Start Test
Study First
Subjects
:
dss
,
bankingt
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. One to Ten year maturities which fund long-term capital investments
Intermediate-term Maturity (Capital Market)
T-Bonds
Downward Slopes
Yield to Maturity for simple loans
2. A higher level of income causes the demand for money at each interest rate to increase and the demand curve to shift to the right.
Income effect
Banker's Acceptance
bond
Interest rate
3. Short-Term Debt Instruments
increases in money supply causes
unemployment rate
Money Market
increasing money supply
4. The higher the default risk means the yield curve...
Long-run Movements
Hs a greater upward shift
When real rate is low
Yield Curve
5. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
financial markets/institutions
Banker's Acceptance
Money (money supply)
Why Revisions are issued to money data
6. Lower the equilibrium price and interest rate.
Slope upward
Tbonds
Income
Bd = Bs
7. Financial instruments whose return is based on the underlying returns on mortgage loans.
Banker's Acceptance
Mortgage-Backed Securities
Supply and Demand for Bonds
Price vs Yields to Maturity
8. Lower Incentive to borrow but a greater incentive to lend.
When real rate is high
recession
Simple Loan
The Preferred Habitat Approach
9. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Medium of Exchange
Slope upward
easily standardized - widely accepted - divisible and not deteriorate quickly
Present Discount Value
10. Many lead to more employment and output
Supply and Demand for Bonds
increasing money supply
common stock
Hs a greater upward shift
11. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
Why Revisions are issued to money data
Discount (zero coupon) Bond
Store of Value
Evolution of the Payment System
12. What kind of movements should we pay attention to in money supply numbers?
Price-level effect
Long-run Movements
Interest rate
Present Discount Value
13. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
Term Structure
How Financial Markets directly improve the well-being of consumers
Store of Value
federal funds rate
14. The relationship between yield and maturity is...
Long-Term Maturities (Bond Market)
Downward
Not constant
Higher Returns
15. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Eurocurrency Market
Flat yield curves
Medium of Exchange
recession
16. Instrumental in moving funds between countries
business cycle
who determines our money supply
foreign exchange market
Mortgage-Backed Securities
17. Bought at price below face value and face value repaid at maturity
Discount (zero coupon) Bond
bond
M1
function of financial markets
18. Foreign currencies deposited in banks outside the home country.
Eurocurrency
Discount (zero coupon) Bond
Term structure theory
role of money
19. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
How Financial Markets directly improve the well-being of consumers
Intermediate-term Maturity (Capital Market)
hyperinflation
Fisher Effect
20. Banks borrow from and lend to each other deposits they hold at the Fed. These are very short term and usually only held over night.
interest rate
Keynesian Model
Federal Funds Market
Wealth
21. Pays owner of bond a fixed payment - until maturity when it pays off face par value
Income effect
Coupon Bond
Ex Ante
Long-Term Maturities (Bond Market)
22. Crucial role in creation of money
Expected Return
Long-Term Maturities (Bond Market)
Money (money supply)
banks and money supply
23. Comparing payoffs at different points in time
Use present value calculations
When real rate is high
Real Interest Rate
T-Bills
24. More than 10 year maturities
Banker's Acceptance
Long-Term Maturities (Bond Market)
financial markets
Humped Yield Curves
25. 30 year maturities but not since 2001
indirect impact
Coupon Bond
Tbonds
Velocity
26. Short-Term securities are very good substitutes for each other within investor's portfolios who collectively impact the market. There aren't separate markets for short-term and long-term securities - there is one single market.
Function of Financial Intermediaries
The Expectation Approach
Medium of Exchange
How Financial Markets promote economic efficiency
27. 3 -6 -12 month securities with no explicit one payment and is sold at a discount. These securities are highly liquid - and can be traded in the secondary market. These are some of the safest securities.
Price-level effect
T-Bills
Repo
Tbonds
28. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
Higher Returns
Interest rate
indirect impact
function of financial markets
29. Cost of borrowing money - expressed as a percentage of the amount borrowed per year.
interest rate
Together
unemployment rate
Bd = Bs
30. Lower excess supply and lower price will fall and interest rates will rise
Use present value calculations
Downward
Bd < Bs
Repo
31. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.
hyperinflation
Certificate of Deposit
Eurobond
Yield on a Discount Basis
32. 2 -5 -10 year maturities
easily standardized - widely accepted - divisible and not deteriorate quickly
Tnotes
Intermediate-term Maturity (Capital Market)
bond
33. Alters publics liquidity and influences spending through portfolio adjustment
increases in money supply causes
When real rate is high
central bank
Ex Ante
34. The degree of uncertainty associated with the return on one asset relative to alternative assets.
T-Notes
Risk
foreign exchange market
unemployment rate
35. Real interest rate: the real interest rate actually realized.
Interest rate
Evolution of the Payment System
Federal Funds Market
Ex Post
36. Expectations theory forms the foundation of the slope of the curve. Liquidity Premium Theory makes Long Term permanent modifications that suggests an up ward slopping curve. Over short periods - relatives supplies of securities have an impact on yiel
The Preferred Habitat Approach
Simple Loan
Term structure theory
Why Revisions are issued to money data
37. Does not deal directly with the public and responsible for executing of the national monetary policy; implements policy by altering money supply and influencing bank behavior.
Term Structure
Not constant
who determines our money supply
central bank
38. How interest rates on bonds of different maturities move over time
role of money
Together
Banker's Acceptance
Ex Ante
39. Relationship among yields of different maturities of hte same type of security.
Keynesian Model
recession
Term Structure
Corporate Bonds
40. Investors are concerned about the after tax return on bonds
Eurocurrency
Discount (zero coupon) Bond
Fisher Effect
tax structure
41. A debt security that promises to make payments periodically for a specified period of time.
bond
How Financial Markets promote economic efficiency
Discount (zero coupon) Bond
interest rate
42. A dollar paid to you one year from now is less valueable than a dollar paid to you today
Downward
Present Discount Value
Certificate of Deposit
Tbonds
43. Sold in a foreign country and denominated in that country's currency.
Price vs Yields to Maturity
Unit of Account
Foreign Bonds
Function of Financial Intermediaries
44. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
Fisher Effect
Real Interest Rate
Yield on a Discount Basis
Mortgage-Backed Securities
45. Long-Term Debt and Equity Instruments
How do regulations ensure the soundness of Financial Intermediaries?
Supply and Demand for Bonds
Interest rate
Capital Markets
46. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
Hs a greater upward shift
Ex Post
Repo
T-Bonds
47. Reduces adverse selection - moral hazard - and insider trading.
Fixed Payment-Loan
Unit of Account
Regulations increase information available to investors which does what?
T-Bonds
48. The total collection of pieces of property that serve to store value
Real world obervations
Corporate Bond Default risk
Humped Yield Curves
Wealth
49. Negotiable in secondary market and can also be resold in the secondary market. Minimum purchase of $100 -000 but the minimum in the secondary market is $2 -000 -000.
Certificate of Deposit
Regulations increase information available to investors which does what?
The Liquidity Premium Modification
Ex Post
50. Flow of earnings per unit of time
Bd < Bs
Income
Price vs Yields to Maturity
Tnotes