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Test your basic knowledge |
DSST Money And Banking
Start Test
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Subjects
:
dss
,
bankingt
Instructions:
Answer 50 questions in 15 minutes.
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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. Long-Term Debt and Equity Instruments
Bd < Bs
Forms of Commercial Papers
Capital Markets
tax structure
2. 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.
bond market (money markets)
Fisher Effect
T-Bills
Income effect
3. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
Flat yield curves
Risk
Income effect
Evolution of the Payment System
4. Investors are concerned about the after tax return on bonds
tax structure
Expected Return
Kind of risk for a bond that's maturity equals the holding period
Why returns are more volatile for Long-Term bonds
5. Relationship among yields of different maturities of hte same type of security.
Not constant
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Term Structure
Simple Loan
6. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Eurobond
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Term Structure
Eurocurrency Market
7. The relationship between yield and maturity is...
Not constant
Risk
bond
role of money
8. Lower excess demand and lower price will rise and interest rates will fall
Money (money supply)
Bd > Bs
Upward Slops
indirect impact
9. More than 10 year maturities
Upward Slops
T-Bills
Long-Term Maturities (Bond Market)
T-Bonds
10. Comparing payoffs at different points in time
Use present value calculations
Upward
bond market (money markets)
Higher Returns
11. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.
Yield to Maturity for simple loans
Yield on a Discount Basis
Upward Slops
Higher Returns
12. Real interest rate: the real interest rate actually realized.
easily standardized - widely accepted - divisible and not deteriorate quickly
Corporate Bond Default risk
How do regulations ensure the soundness of Financial Intermediaries?
Ex Post
13. Praises rising at a fast and furious pace
hyperinflation
How Financial Markets promote economic efficiency
Tbonds
Fiat Money
14. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
Eurobond
indirect impact
Bd < Bs
direct impact
15. One to Ten year maturities which fund long-term capital investments
Intermediate-term Maturity (Capital Market)
bond market (money markets)
Store of Value
common stock
16. 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.
OTC
The Liquidity Premium Modification
Price vs Yields to Maturity
inflation
17. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
Income effect
function of financial markets
Price vs Yields to Maturity
Mortgage-Backed Securities
18. Higher default risk compared to municipal Bonds
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Corporate Bond Default risk
role of money
recession
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.
Certificate of Deposit
financial markets/institutions
interest rate
bond
20. Held for one- ten years.
Banker's Acceptance
Use present value calculations
T-Notes
bond
21. Crucial role in creation of money
Medium of Exchange
banks and money supply
Slope upward
Money Market
22. 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.
role of money
T-Bonds
financial markets/institutions
Forms of Commercial Papers
23. Many lead to more employment and output
Eurocurrency
increasing money supply
Ex Ante
business cycle
24. Less than one year and service current liquidity needs
Money Market
Short-Term Maturity
Real world obervations
function of financial markets
25. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
Flat yield curves
When real rate is low
federal funds rate
Long-Term Maturities (Bond Market)
26. Financial instruments whose return is based on the underlying returns on mortgage loans.
Mortgage-Backed Securities
Function of Financial Intermediaries
financial markets
Real world obervations
27. 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.
financial markets/institutions
Tbonds
OTC
Federal Funds Market
28. Instrumental in moving funds between countries
Humped Yield Curves
Medium of Exchange
foreign exchange market
indirect impact
29. 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.
direct impact
When real rate is high
interest rate
The Expectation Approach
30. Interest rate that equates today's value with present value of all future payments.
unemployment rate
Money Market
Yield to Maturity for simple loans
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
31. Short-Term Debt Instruments
The Liquidity Premium Modification
Money (money supply)
Bd > Bs
Money Market
32. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
unemployment rate
Ex Ante
Yield Curve
Term Structure
33. What will investors expect for taking on higher default risk?
T-Notes
Long-Term Maturities (Bond Market)
Higher Returns
financial markets/institutions
34. A debt security that promises to make payments periodically for a specified period of time.
central bank
Velocity
Medium of Exchange
bond
35. Lower the equilibrium price and interest rate.
Together
Bd = Bs
Store of Value
Unit of Account
36. 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.
Money (money supply)
central bank
Simple Loan
direct impact
37. 2 -5 -10 year maturities
monetary policy
Yield on a Discount Basis
Money (money supply)
Tnotes
38. Most Common
Upward
Why returns are more volatile for Long-Term bonds
Term structure theory
Upward Slops
39. 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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40. Sold in a foreign country and denominated in that country's currency.
banks and money supply
Foreign Bonds
monetary policy
Fiat Money
41. The higher the default risk means the yield curve...
Unit of Account
function of financial markets
monetary policy
Hs a greater upward shift
42. Rare
T-Notes
Downward Slopes
who determines our money supply
Interest rate
43. The degree of uncertainty associated with the return on one asset relative to alternative assets.
monetary policy
The Preferred Habitat Approach
Risk
Term Structure
44. Determines interest rates
Corporate Bond Default risk
bond
Yield to Maturity for simple loans
bond market (money markets)
45. 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
Real world obervations
Evolution of the Payment System
Yield to Maturity for simple loans
Discount (zero coupon) Bond
46. Alters publics liquidity and influences spending through portfolio adjustment
T-Bonds
increases in money supply causes
Banker's Acceptance
Foreign Bonds
47. 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.
financial markets
Intermediate-term Maturity (Capital Market)
inflation
Price-level effect
48. The central bank
Ex Post
Interest rate
recession
who determines our money supply
49. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
recession
Bd > Bs
Medium of Exchange
bond
50. Yield curves most always...
Kind of risk for a bond that's maturity equals the holding period
Slope upward
Corporate Bond Default risk
Price-level effect
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