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DSST Money And Banking

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. Foreign currencies deposited in banks outside the home country.






2. How interest rates on bonds of different maturities move over time






3. Periods of declining aggregate output - unemployment high - investment is low.






4. 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






5. Excess liquidity is spent on goods and services






6. Principal plus interest paid to lender at given maturity date






7. Crucial role in creation of money






8. More than 10 year maturities






9. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money






10. Higher default risk compared to municipal Bonds






11. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.






12. 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.






13. 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.






14. What kind of movements should we pay attention to in money supply numbers?






15. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending






16. Financial instruments whose return is based on the underlying returns on mortgage loans.






17. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.






18. If short-term interest rates are low than the yield curve slopes...






19. Lower excess supply and lower price will fall and interest rates will rise






20. The upward and downward movement of aggregate output produced in the economy.






21. They have a higher interest-rate risk.






22. Comparing payoffs at different points in time






23. The central bank






24. Lower Incentive to borrow but a greater incentive to lend.






25. Reduces adverse selection - moral hazard - and insider trading.






26. 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.






27. Nominal interest rate is not adjusted for inflation.






28. 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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29. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.






30. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.






31. The interest rate at which private depository institutions lend balances to other depository institutions usually over night






32. What will investors expect for taking on higher default risk?






33. Rare






34. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept






35. 2 -5 -10 year maturities






36. Allowing consumers to time their purchases better.






37. 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.






38. 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






39. Short-Term Debt Instruments






40. Promotes economic efficiency by minimizing the time spent in exchanging goods and services






41. For a commodity to function efficiently as money it must be...






42. A dollar paid to you one year from now is less valueable than a dollar paid to you today






43. Bought at price below face value and face value repaid at maturity






44. Lower the equilibrium price and interest rate.






45. The higher the default risk means the yield curve...






46. Bond denominated in a currency other than that of the country in which it is sold.






47. Instrumental in moving funds between countries






48. Intermediate Yields are highest






49. The increase in the price of set goods and services in a given economy over a period of time - the percent change.






50. Influence on business cycle - inflation - interest rates