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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. Bought at price below face value and face value repaid at maturity
Discount (zero coupon) Bond
Tbonds
Ex Post
Risk
2. 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.
business cycle
Bd < Bs
Forms of Commercial Papers
Federal Funds Market
3. 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
How Financial Markets directly improve the well-being of consumers
Kind of risk for a bond that's maturity equals the holding period
Repo
4. 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
Upward Slops
OTC
Bd < Bs
5. Alters publics liquidity and influences spending through portfolio adjustment
increases in money supply causes
Money (money supply)
Eurobond
Together
6. Paper currency - has no real value
Fiat Money
Coupon Bond
Eurobond
common stock
7. The total collection of pieces of property that serve to store value
Yield to Maturity for simple loans
Wealth
Evolution of the Payment System
Forms of Commercial Papers
8. 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.
Not constant
Certificate of Deposit
Income
Bd > Bs
9. Financial instruments whose return is based on the underlying returns on mortgage loans.
Mortgage-Backed Securities
business cycle
Wealth
Regulations increase information available to investors which does what?
10. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
Discount (zero coupon) Bond
Expected Return
federal funds rate
who determines our money supply
11. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Flat yield curves
Medium of Exchange
Simple Loan
Together
12. Short-Term Debt Instruments
Money Market
Intermediate-term Maturity (Capital Market)
Store of Value
Discount (zero coupon) Bond
13. Allowing consumers to time their purchases better.
How Financial Markets directly improve the well-being of consumers
Long-Term Maturities (Bond Market)
Use present value calculations
Bd = Bs
14. 30 year maturities but not since 2001
Tbonds
Humped Yield Curves
How do regulations ensure the soundness of Financial Intermediaries?
increases in money supply causes
15. For a commodity to function efficiently as money it must be...
Wealth
increasing money supply
easily standardized - widely accepted - divisible and not deteriorate quickly
business cycle
16. 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
17. Intermediate Yields are highest
foreign exchange market
Yield Curve
Humped Yield Curves
Evolution of the Payment System
18. Bond denominated in a currency other than that of the country in which it is sold.
Money (money supply)
banks and money supply
Eurobond
Together
19. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
Why returns are more volatile for Long-Term bonds
How do regulations ensure the soundness of Financial Intermediaries?
business cycle
tax structure
20. Yield curves most always...
Yield Curve
Bd = Bs
Upward
Slope upward
21. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
Downward Slopes
indirect impact
federal funds rate
Yield on a Discount Basis
22. A share of ownership in a corporation
Yield to Maturity for simple loans
OTC
Coupon Bond
common stock
23. Investors are concerned about the after tax return on bonds
Yield to Maturity for simple loans
function of financial markets
tax structure
The Expectation Approach
24. Lower transaction costs - reduce risk - asymmetric information.
Function of Financial Intermediaries
Income
Downward
inflation
25. 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
Downward Slopes
Ex Post
Bd = Bs
26. Long-Term Debt and Equity Instruments
Capital Markets
Discount (zero coupon) Bond
central bank
Corporate Bond Default risk
27. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
tax structure
Fisher Effect
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Corporate Bonds
28. Yields similar for all maturities
Real Interest Rate
Flat yield curves
Discount (zero coupon) Bond
Yield on a Discount Basis
29. 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
Bd > Bs
Mortgage-Backed Securities
Velocity
30. 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.
Kind of risk for a bond that's maturity equals the holding period
Corporate Bonds
OTC
Term Structure
31. The degree of uncertainty associated with the return on one asset relative to alternative assets.
Fixed Payment-Loan
Risk
T-Bills
Upward
32. 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.
Together
Price vs Yields to Maturity
business cycle
Price-level effect
33. If short-term interest rates are low than the yield curve slopes...
Ex Post
Upward
The Preferred Habitat Approach
direct impact
34. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
Ex Post
Evolution of the Payment System
easily standardized - widely accepted - divisible and not deteriorate quickly
Expected Return
35. Lower excess supply and lower price will fall and interest rates will rise
T-Bonds
Bd < Bs
Banker's Acceptance
Hs a greater upward shift
36. Interest rate that equates today's value with present value of all future payments.
Tbonds
Yield to Maturity for simple loans
Eurocurrency Market
Present Discount Value
37. Comparing payoffs at different points in time
How do regulations ensure the soundness of Financial Intermediaries?
Capital Markets
who determines our money supply
Use present value calculations
38. Instrumental in moving funds between countries
Yield on a Discount Basis
Corporate Bond Default risk
Wealth
foreign exchange market
39. Reduces adverse selection - moral hazard - and insider trading.
Bd = Bs
When real rate is high
Unit of Account
Regulations increase information available to investors which does what?
40. It will shift it to the right.
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Why Revisions are issued to money data
Downward Slopes
Upward Slops
41. A dollar paid to you one year from now is less valueable than a dollar paid to you today
easily standardized - widely accepted - divisible and not deteriorate quickly
OTC
Present Discount Value
indirect impact
42. Used to measure value in the economy
Unit of Account
Money (money supply)
Humped Yield Curves
hyperinflation
43. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period
Velocity
Present Discount Value
Kind of risk for a bond that's maturity equals the holding period
Short-Term Maturity
44. Precious Metals or another valueable commodity
Fixed Payment-Loan
Store of Value
Supply and Demand for Bonds
Commodity Money
45. The increase in the price of set goods and services in a given economy over a period of time - the percent change.
Foreign Bonds
inflation
Money Market
Wealth
46. The percent of available labor force unemployed
hyperinflation
Tnotes
unemployment rate
Evolution of the Payment System
47. Lower the equilibrium price and interest rate.
How Financial Markets directly improve the well-being of consumers
Bd = Bs
foreign exchange market
Regulations increase information available to investors which does what?
48. If the short-term interest rates are high than the yield curve slopes?
banks and money supply
Downward
common stock
Why Revisions are issued to money data
49. 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
Term structure theory
Velocity
Use present value calculations
The Preferred Habitat Approach
50. Praises rising at a fast and furious pace
Bd = Bs
hyperinflation
Why Revisions are issued to money data
Interest rate