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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. When bond is at par - the yield equals the coupon rate. The price and yield are negatively related. The yield greater than coupon rate when bond price is below par.
increasing money supply
Yield on a Discount Basis
Price vs Yields to Maturity
Eurocurrency
2. Instrumental in moving funds between countries
foreign exchange market
easily standardized - widely accepted - divisible and not deteriorate quickly
central bank
M1
3. Reduces adverse selection - moral hazard - and insider trading.
Downward Slopes
The Preferred Habitat Approach
common stock
Regulations increase information available to investors which does what?
4. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period
When real rate is low
Velocity
direct impact
Income effect
5. A dollar paid to you one year from now is less valueable than a dollar paid to you today
Humped Yield Curves
Present Discount Value
T-Bills
Commodity Money
6. A bank loan typically used by a company to finance storage or shipment of goods. This bank draft is like a check - and guarantees future payment. These securities are active in the Secondary Market
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7. The total collection of pieces of property that serve to store value
indirect impact
Eurobond
T-Bills
Wealth
8. 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.
Commodity Money
Fixed Payment-Loan
T-Bonds
Income effect
9. Excess liquidity is spent on goods and services
Fiat Money
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Ex Post
direct impact
10. The increase in the price of set goods and services in a given economy over a period of time - the percent change.
Slope upward
Real world obervations
Real Interest Rate
inflation
11. Yield to maturity; a measure of an interternporal price
function of financial markets
Interest rate
bond market (money markets)
hyperinflation
12. Paper currency - has no real value
T-Notes
Certificate of Deposit
Fiat Money
direct impact
13. Financial instruments whose return is based on the underlying returns on mortgage loans.
central bank
tax structure
How do regulations ensure the soundness of Financial Intermediaries?
Mortgage-Backed Securities
14. Nominal interest rate is not adjusted for inflation.
Slope upward
How Financial Markets directly improve the well-being of consumers
hyperinflation
Interest rate
15. Lower excess demand and lower price will rise and interest rates will fall
Bd > Bs
Not constant
Expected Return
foreign exchange market
16. A share of ownership in a corporation
Interest rate
bond market (money markets)
Expected Return
common stock
17. 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.
Unit of Account
Certificate of Deposit
Present Discount Value
federal funds rate
18. Intermediate Yields are highest
Humped Yield Curves
Not constant
When real rate is high
Present Discount Value
19. Precious Metals or another valueable commodity
Use present value calculations
Price-level effect
Corporate Bond Default risk
Commodity Money
20. Long-Term Debt and Equity Instruments
Capital Markets
Present Discount Value
Together
unemployment rate
21. 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.
Regulations increase information available to investors which does what?
Federal Funds Market
Ex Post
hyperinflation
22. Praises rising at a fast and furious pace
T-Bills
hyperinflation
Price vs Yields to Maturity
business cycle
23. Principal plus interest paid to lender at given maturity date
Regulations increase information available to investors which does what?
Upward Slops
Simple Loan
When real rate is high
24. Lower Incentive to borrow but a greater incentive to lend.
When real rate is high
M1
The Preferred Habitat Approach
Expected Return
25. 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
Tnotes
Intermediate-term Maturity (Capital Market)
Yield on a Discount Basis
Term structure theory
26. 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
Higher Returns
Downward Slopes
Term structure theory
27. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
T-Bills
Repo
who determines our money supply
Income effect
28. Comparing payoffs at different points in time
Use present value calculations
T-Bonds
Yield to Maturity for simple loans
Fixed Payment-Loan
29. 30 year maturities but not since 2001
M1
Tbonds
Function of Financial Intermediaries
Kind of risk for a bond that's maturity equals the holding period
30. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Price vs Yields to Maturity
Fixed Payment-Loan
hyperinflation
Intermediate-term Maturity (Capital Market)
31. What will investors expect for taking on higher default risk?
Income effect
Use present value calculations
Higher Returns
unemployment rate
32. No interest- rate risk
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33. 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.
financial markets/institutions
The Liquidity Premium Modification
Interest rate
Corporate Bonds
34. 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.
Corporate Bonds
foreign exchange market
Foreign Bonds
tax structure
35. Yields similar for all maturities
Ex Ante
Unit of Account
Forms of Commercial Papers
Flat yield curves
36. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
role of money
Long-Term Maturities (Bond Market)
Downward Slopes
Evolution of the Payment System
37. Bought at price below face value and face value repaid at maturity
Discount (zero coupon) Bond
T-Bills
Evolution of the Payment System
tax structure
38. The degree of uncertainty associated with the return on one asset relative to alternative assets.
Price vs Yields to Maturity
Risk
Velocity
Upward
39. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
role of money
Term Structure
Capital Markets
Price-level effect
40. The upward and downward movement of aggregate output produced in the economy.
business cycle
Eurocurrency
Store of Value
Certificate of Deposit
41. One to Ten year maturities which fund long-term capital investments
The Expectation Approach
Supply and Demand for Bonds
indirect impact
Intermediate-term Maturity (Capital Market)
42. Lower excess supply and lower price will fall and interest rates will rise
Higher Returns
Bd > Bs
Bd < Bs
Why Revisions are issued to money data
43. Short-Term Debt Instruments
Real Interest Rate
who determines our money supply
Money Market
OTC
44. Lower transaction costs - reduce risk - asymmetric information.
Function of Financial Intermediaries
Wealth
Coupon Bond
Commodity Money
45. If the short-term interest rates are high than the yield curve slopes?
Fiat Money
Downward
Certificate of Deposit
Why returns are more volatile for Long-Term bonds
46. Interest rate that equates today's value with present value of all future payments.
T-Bills
Forms of Commercial Papers
Corporate Bond Default risk
Yield to Maturity for simple loans
47. Determines interest rates
bond market (money markets)
Hs a greater upward shift
Corporate Bonds
inflation
48. The percent of available labor force unemployed
business cycle
Foreign Bonds
Bd = Bs
unemployment rate
49. How interest rates on bonds of different maturities move over time
interest rate
T-Bills
Together
Coupon Bond
50. 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.
financial markets
monetary policy
The Preferred Habitat Approach
T-Bills