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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. Small depository institutions report infrequently and adjustments must be made for seasonal variations
bond
OTC
Income effect
Why Revisions are issued to money data
2. A share of ownership in a corporation
direct impact
common stock
central bank
Why returns are more volatile for Long-Term bonds
3. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Federal Funds Market
Medium of Exchange
role of money
Supply and Demand for Bonds
4. The percent of available labor force unemployed
Ex Ante
The Liquidity Premium Modification
Term structure theory
unemployment rate
5. Bringing together of buyers and sellers of financial securities to establish prices; includes banks - savings and loans - credit unions - investment banks - and brokers - mutual funds - and bond markets.
Regulations increase information available to investors which does what?
financial markets/institutions
Income effect
Humped Yield Curves
6. Intermediate Yields are highest
recession
Humped Yield Curves
Hs a greater upward shift
Banker's Acceptance
7. Nominal interest rate is not adjusted for inflation.
Corporate Bond Default risk
Present Discount Value
Bd > Bs
Interest rate
8. Short-Term Debt Instruments
Money Market
central bank
interest rate
How do regulations ensure the soundness of Financial Intermediaries?
9. Determines interest rates
Corporate Bond Default risk
Kind of risk for a bond that's maturity equals the holding period
bond market (money markets)
The Liquidity Premium Modification
10. The return expected over the next period on one asset relative to the alternative asset.
Yield on a Discount Basis
Expected Return
Supply and Demand for Bonds
Not constant
11. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
Evolution of the Payment System
Income
Banker's Acceptance
Capital Markets
12. Held for one- ten years.
Keynesian Model
Upward
T-Notes
Simple Loan
13. Praises rising at a fast and furious pace
Term structure theory
easily standardized - widely accepted - divisible and not deteriorate quickly
When real rate is high
hyperinflation
14. Used to save purchasing power; most liquid of all assets but loses value during inflation
business cycle
Ex Ante
Store of Value
increases in money supply causes
15. Paper currency - has no real value
Fiat Money
Kind of risk for a bond that's maturity equals the holding period
business cycle
Short-Term Maturity
16. No interest- rate risk
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17. Lower Incentive to borrow but a greater incentive to lend.
Fiat Money
unemployment rate
When real rate is high
T-Notes
18. The total collection of pieces of property that serve to store value
federal funds rate
Wealth
Eurobond
Repo
19. Long-Term Debt and Equity Instruments
Kind of risk for a bond that's maturity equals the holding period
Together
Capital Markets
How Financial Markets directly improve the well-being of consumers
20. Long-Term debt instruments of Corporations which are held 2-30 years. These securities have excellent credit ratings and pay interest two times a year and pay at maturity. These can be redeemed for shares of stock.
role of money
Corporate Bonds
Eurobond
Upward Slops
21. Relationship among yields of different maturities of hte same type of security.
Use present value calculations
Flat yield curves
federal funds rate
Term Structure
22. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
easily standardized - widely accepted - divisible and not deteriorate quickly
The Expectation Approach
Upward
Fixed Payment-Loan
23. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
Price-level effect
increasing money supply
business cycle
federal funds rate
24. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
T-Bonds
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
financial markets
interest rate
25. 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.
central bank
Expected Return
interest rate
Slope upward
26. Pays owner of bond a fixed payment - until maturity when it pays off face par value
Unit of Account
Coupon Bond
direct impact
Long-run Movements
27. Yield to maturity; a measure of an interternporal price
Interest rate
The Expectation Approach
Capital Markets
federal funds rate
28. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
Supply and Demand for Bonds
Real Interest Rate
Regulations increase information available to investors which does what?
Income effect
29. Foreign currencies deposited in banks outside the home country.
Long-Term Maturities (Bond Market)
Eurocurrency
How Financial Markets directly improve the well-being of consumers
Velocity
30. Comparing payoffs at different points in time
Use present value calculations
Kind of risk for a bond that's maturity equals the holding period
Interest rate
The Liquidity Premium Modification
31. Real interest rate: the real interest rate actually realized.
recession
Ex Post
Fixed Payment-Loan
Slope upward
32. The central bank
Yield to Maturity for simple loans
Together
who determines our money supply
easily standardized - widely accepted - divisible and not deteriorate quickly
33. A rise in the price level causes the demand for money at each interest rates to increase and the demand curve to shift to the right.
Fiat Money
bond
Price-level effect
recession
34. 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.
The Expectation Approach
T-Bills
monetary policy
Price-level effect
35. Alters publics liquidity and influences spending through portfolio adjustment
Repo
increases in money supply causes
Real world obervations
Money Market
36. What kind of movements should we pay attention to in money supply numbers?
Tnotes
financial markets
Downward Slopes
Long-run Movements
37. Lower the equilibrium price and interest rate.
Price vs Yields to Maturity
T-Notes
Interest rate
Bd = Bs
38. 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.
Yield Curve
Evolution of the Payment System
Income effect
Intermediate-term Maturity (Capital Market)
39. Take the form of promissory notes - drafts - checks - and CDs
direct impact
banks and money supply
Forms of Commercial Papers
increases in money supply causes
40. Prices of Long-Term securities are more volatile possibly suffer Capital Loss if owner needs to sell security prior to maturity. Prefer to hold Short-term securities for liquidity. Suggests Long term rates will always be higher than short term.
The Liquidity Premium Modification
Yield to Maturity for simple loans
Coupon Bond
Income
41. More than 10 year maturities
banks and money supply
function of financial markets
Long-Term Maturities (Bond Market)
Discount (zero coupon) Bond
42. Lower excess supply and lower price will fall and interest rates will rise
T-Bills
tax structure
Upward Slops
Bd < Bs
43. It will shift it to the right.
monetary policy
Why returns are more volatile for Long-Term bonds
Downward
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
44. The upward and downward movement of aggregate output produced in the economy.
tax structure
Use present value calculations
business cycle
Federal Funds Market
45. How interest rates on bonds of different maturities move over time
Kind of risk for a bond that's maturity equals the holding period
Intermediate-term Maturity (Capital Market)
Together
Repo
46. They channel funds from savers to investors - thereby promoting economic efficiency
Slope upward
Eurocurrency Market
financial markets
common stock
47. Many lead to more employment and output
Fixed Payment-Loan
Together
increasing money supply
Intermediate-term Maturity (Capital Market)
48. A debt security that promises to make payments periodically for a specified period of time.
bond
Not constant
T-Notes
federal funds rate
49. When interest rates are high relative to past rates - investors expect them to decline and the prices of bonds to rise in the future resulting in big capital gains. Investors would then favor long term securities which drives up price and lowers yiel
Banker's Acceptance
indirect impact
Intermediate-term Maturity (Capital Market)
Real world obervations
50. Periods of declining aggregate output - unemployment high - investment is low.
recession
increases in money supply causes
interest rate
who determines our money supply
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