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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. Principal plus interest paid to lender at given maturity date
Humped Yield Curves
increases in money supply causes
Regulations increase information available to investors which does what?
Simple Loan
2. Comparing payoffs at different points in time
Evolution of the Payment System
business cycle
Use present value calculations
Certificate of Deposit
3. Flow of earnings per unit of time
financial markets
Income
T-Notes
Simple Loan
4. Relationship among yields of different maturities of hte same type of security.
Term Structure
Commodity Money
financial markets
T-Bonds
5. How interest rates on bonds of different maturities move over time
Federal Funds Market
Eurocurrency Market
Repo
Together
6. 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.
Interest rate
foreign exchange market
The Expectation Approach
role of money
7. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
How do regulations ensure the soundness of Financial Intermediaries?
Why Revisions are issued to money data
Term structure theory
business cycle
8. 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
Tbonds
How Financial Markets directly improve the well-being of consumers
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Real world obervations
9. Allowing consumers to time their purchases better.
Bd = Bs
Repo
unemployment rate
How Financial Markets directly improve the well-being of consumers
10. The upward and downward movement of aggregate output produced in the economy.
interest rate
banks and money supply
Eurobond
business cycle
11. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
business cycle
Commodity Money
Yield to Maturity for simple loans
T-Bills
12. Lower excess supply and lower price will fall and interest rates will rise
Bd < Bs
Regulations increase information available to investors which does what?
Federal Funds Market
Certificate of Deposit
13. Financial instruments whose return is based on the underlying returns on mortgage loans.
easily standardized - widely accepted - divisible and not deteriorate quickly
Banker's Acceptance
Mortgage-Backed Securities
Supply and Demand for Bonds
14. 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.
Federal Funds Market
Fisher Effect
Supply and Demand for Bonds
Yield Curve
15. Nominal interest rate is not adjusted for inflation.
Interest rate
Term Structure
Eurobond
Corporate Bonds
16. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits
M1
Downward
Income
Use present value calculations
17. The return expected over the next period on one asset relative to the alternative asset.
Hs a greater upward shift
T-Bills
Medium of Exchange
Expected Return
18. Sold in a foreign country and denominated in that country's currency.
How do regulations ensure the soundness of Financial Intermediaries?
Money (money supply)
Foreign Bonds
Expected Return
19. More than 10 year maturities
Simple Loan
Short-Term Maturity
Long-Term Maturities (Bond Market)
Together
20. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
direct impact
Money Market
common stock
Ex Ante
21. The central bank
Regulations increase information available to investors which does what?
Velocity
who determines our money supply
Fisher Effect
22. Alters publics liquidity and influences spending through portfolio adjustment
Kind of risk for a bond that's maturity equals the holding period
increases in money supply causes
bond
Present Discount Value
23. Foreign currencies deposited in banks outside the home country.
recession
Long-Term Maturities (Bond Market)
easily standardized - widely accepted - divisible and not deteriorate quickly
Eurocurrency
24. 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.
Upward Slops
Short-Term Maturity
Certificate of Deposit
Unit of Account
25. Excess liquidity is spent on goods and services
Supply and Demand for Bonds
Federal Funds Market
function of financial markets
direct impact
26. It will shift it to the right.
M1
Regulations increase information available to investors which does what?
Real Interest Rate
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
27. Seller will buy back the asset at a later date and typically at a higher price. These securities are usually government securities and are used by banks and Large Corporations.
Term structure theory
Downward Slopes
Coupon Bond
Repo
28. 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.
Supply and Demand for Bonds
Regulations increase information available to investors which does what?
OTC
Price-level effect
29. They channel funds from savers to investors - thereby promoting economic efficiency
financial markets
Term structure theory
Tbonds
When real rate is low
30. Lower excess demand and lower price will rise and interest rates will fall
Bd > Bs
Money Market
Price vs Yields to Maturity
business cycle
31. Supply and demand concept for different maturities will establish the specific rates for each maturity range. Changes in supply and demand can cause the rates to get out of line with expectations. However investors will drop preferred habitat if rate
increasing money supply
Function of Financial Intermediaries
The Preferred Habitat Approach
Term Structure
32. Praises rising at a fast and furious pace
Function of Financial Intermediaries
Keynesian Model
hyperinflation
Capital Markets
33. 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
tax structure
Corporate Bond Default risk
Term structure theory
Tnotes
34. Used to save purchasing power; most liquid of all assets but loses value during inflation
Higher Returns
central bank
OTC
Store of Value
35. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Money (money supply)
Price-level effect
The Liquidity Premium Modification
Store of Value
36. Small depository institutions report infrequently and adjustments must be made for seasonal variations
Capital Markets
M1
Why Revisions are issued to money data
When real rate is low
37. Interest rate that equates today's value with present value of all future payments.
Discount (zero coupon) Bond
Upward
Yield to Maturity for simple loans
Ex Post
38. What kind of movements should we pay attention to in money supply numbers?
Long-run Movements
Wealth
Expected Return
financial markets/institutions
39. 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.
How Financial Markets promote economic efficiency
financial markets/institutions
Intermediate-term Maturity (Capital Market)
Why Revisions are issued to money data
40. 2 -5 -10 year maturities
Downward
Not constant
Eurocurrency Market
Tnotes
41. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
Real world obervations
Real Interest Rate
Kind of risk for a bond that's maturity equals the holding period
Bd > Bs
42. 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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43. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.
Bd > Bs
Yield on a Discount Basis
M1
Coupon Bond
44. Yield curves most always...
recession
increases in money supply causes
business cycle
Slope upward
45. The total collection of pieces of property that serve to store value
Wealth
Use present value calculations
Commodity Money
Why Revisions are issued to money data
46. The higher the default risk means the yield curve...
Why returns are more volatile for Long-Term bonds
role of money
Hs a greater upward shift
The Preferred Habitat Approach
47. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
Velocity
Upward
function of financial markets
Yield Curve
48. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
Fisher Effect
financial markets
Eurocurrency
monetary policy
49. 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.
How Financial Markets directly improve the well-being of consumers
Price-level effect
Short-Term Maturity
When real rate is high
50. Paper currency - has no real value
Yield on a Discount Basis
Fiat Money
Expected Return
Coupon Bond