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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. The total collection of pieces of property that serve to store value
Wealth
Short-Term Maturity
Discount (zero coupon) Bond
Unit of Account
2. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
Capital Markets
Regulations increase information available to investors which does what?
How do regulations ensure the soundness of Financial Intermediaries?
Wealth
3. If short-term interest rates are low than the yield curve slopes...
Bd = Bs
When real rate is high
Upward
Downward
4. Principal plus interest paid to lender at given maturity date
Simple Loan
increases in money supply causes
Tnotes
monetary policy
5. Alters publics liquidity and influences spending through portfolio adjustment
Repo
increases in money supply causes
When real rate is low
Slope upward
6. Take the form of promissory notes - drafts - checks - and CDs
Forms of Commercial Papers
recession
Yield Curve
Income
7. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
Tbonds
T-Bonds
Price vs Yields to Maturity
Why returns are more volatile for Long-Term bonds
8. Most Common
Long-run Movements
Upward Slops
Hs a greater upward shift
Slope upward
9. Determines interest rates
bond market (money markets)
Tbonds
Money (money supply)
federal funds rate
10. Paper currency - has no real value
Long-Term Maturities (Bond Market)
recession
Fiat Money
How do regulations ensure the soundness of Financial Intermediaries?
11. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits
Humped Yield Curves
M1
Medium of Exchange
Fisher Effect
12. At lower prices (higher i) - ceteris paribus - the quantity demanded of bonds is higher- an inverse relationship ' ' the quantity supplied of bonds is lower- a positive relationship.
Supply and Demand for Bonds
Keynesian Model
Yield on a Discount Basis
financial markets/institutions
13. Lower transaction costs - reduce risk - asymmetric information.
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Federal Funds Market
Function of Financial Intermediaries
financial markets
14. The over the counter market. Equity shares offered by companies that don't meet listing requirements for major stock exchanges - or choose not to be listed there - and instead are traded in decentralized markets.
Term Structure
Long-Term Maturities (Bond Market)
Tbonds
OTC
15. Yields similar for all maturities
When real rate is high
Evolution of the Payment System
Flat yield curves
Coupon Bond
16. One to Ten year maturities which fund long-term capital investments
Why Revisions are issued to money data
Intermediate-term Maturity (Capital Market)
Together
Money Market
17. How interest rates on bonds of different maturities move over time
Regulations increase information available to investors which does what?
Together
Yield on a Discount Basis
Real Interest Rate
18. The percent of available labor force unemployed
unemployment rate
Term structure theory
indirect impact
Eurobond
19. 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.
Store of Value
Kind of risk for a bond that's maturity equals the holding period
When real rate is high
Certificate of Deposit
20. Excess liquidity is spent on goods and services
financial markets
direct impact
Term structure theory
T-Notes
21. Higher default risk compared to municipal Bonds
banks and money supply
Function of Financial Intermediaries
Corporate Bond Default risk
Money Market
22. No interest- rate risk
23. Lower excess supply and lower price will fall and interest rates will rise
Interest rate
OTC
Humped Yield Curves
Bd < Bs
24. What kind of movements should we pay attention to in money supply numbers?
central bank
Simple Loan
Long-run Movements
Eurocurrency Market
25. It determines the equilibrium interest rate in terms of the supply of land demanded for money . People store their wealth in money and bonds. If the market for money is in equilibrium (Ms=Md) then the bond markets are also in equilibrium (Bs=Bd)
interest rate
OTC
Store of Value
Keynesian Model
26. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.
T-Bills
Yield on a Discount Basis
Real world obervations
Unit of Account
27. Long-Term Debt and Equity Instruments
Long-Term Maturities (Bond Market)
Capital Markets
financial markets/institutions
OTC
28. Yield to maturity; a measure of an interternporal price
Humped Yield Curves
Income
Interest rate
Unit of Account
29. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Coupon Bond
Mortgage-Backed Securities
Medium of Exchange
Supply and Demand for Bonds
30. Rare
How Financial Markets directly improve the well-being of consumers
Federal Funds Market
interest rate
Downward Slopes
31. They have a higher interest-rate risk.
Corporate Bonds
Interest rate
Upward Slops
Why returns are more volatile for Long-Term bonds
32. Precious Metals or another valueable commodity
Money Market
Eurobond
central bank
Commodity Money
33. Greater incentive to borrow and less to lend.
When real rate is low
Bd = Bs
Eurocurrency
monetary policy
34. Periods of declining aggregate output - unemployment high - investment is low.
recession
Bd = Bs
Tbonds
Eurobond
35. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Long-run Movements
Slope upward
Fixed Payment-Loan
Fisher Effect
36. A debt security that promises to make payments periodically for a specified period of time.
indirect impact
Intermediate-term Maturity (Capital Market)
inflation
bond
37. Yield curves most always...
Slope upward
Mortgage-Backed Securities
bond market (money markets)
Coupon Bond
38. A share of ownership in a corporation
common stock
Bd = Bs
The Preferred Habitat Approach
Interest rate
39. 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
increasing money supply
Fiat Money
Present Discount Value
40. Foreign currencies deposited in banks outside the home country.
central bank
recession
Money Market
Eurocurrency
41. The relationship between yield and maturity is...
Real Interest Rate
bond market (money markets)
Eurocurrency Market
Not constant
42. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Money (money supply)
Interest rate
Evolution of the Payment System
T-Bills
43. The return expected over the next period on one asset relative to the alternative asset.
Tbonds
Together
Federal Funds Market
Expected Return
44. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
Tbonds
Evolution of the Payment System
Long-Term Maturities (Bond Market)
Ex Post
45. 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
When real rate is high
Why Revisions are issued to money data
Banker's Acceptance
46. 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.
T-Bonds
business cycle
financial markets/institutions
inflation
47. It will shift it to the right.
role of money
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Keynesian Model
Humped Yield Curves
48. Crucial role in creation of money
Corporate Bonds
Money Market
Flat yield curves
banks and money supply
49. Reduces adverse selection - moral hazard - and insider trading.
easily standardized - widely accepted - divisible and not deteriorate quickly
Bd > Bs
Regulations increase information available to investors which does what?
federal funds rate
50. Interest rate that equates today's value with present value of all future payments.
Higher Returns
business cycle
Yield to Maturity for simple loans
foreign exchange market