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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. Greater incentive to borrow and less to lend.
M1
When real rate is low
recession
Yield to Maturity for simple loans
2. 30 year maturities but not since 2001
business cycle
Corporate Bond Default risk
federal funds rate
Tbonds
3. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
Yield Curve
Hs a greater upward shift
Bd = Bs
Coupon Bond
4. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Evolution of the Payment System
Yield Curve
Tbonds
Money (money supply)
5. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Federal Funds Market
Banker's Acceptance
The Preferred Habitat Approach
Fixed Payment-Loan
6. No interest- rate risk
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7. 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.
Ex Post
The Liquidity Premium Modification
Price vs Yields to Maturity
Eurobond
8. Bond denominated in a currency other than that of the country in which it is sold.
Supply and Demand for Bonds
Commodity Money
Eurobond
bond market (money markets)
9. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
foreign exchange market
How do regulations ensure the soundness of Financial Intermediaries?
Term Structure
Downward
10. Long-Term Debt and Equity Instruments
Simple Loan
Capital Markets
Certificate of Deposit
Ex Ante
11. 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
easily standardized - widely accepted - divisible and not deteriorate quickly
Upward Slops
Present Discount Value
Term structure theory
12. Less than one year and service current liquidity needs
bond
Not constant
Short-Term Maturity
How Financial Markets directly improve the well-being of consumers
13. The increase in the price of set goods and services in a given economy over a period of time - the percent change.
Long-Term Maturities (Bond Market)
inflation
Regulations increase information available to investors which does what?
Eurocurrency
14. More than 10 year maturities
How do regulations ensure the soundness of Financial Intermediaries?
Long-Term Maturities (Bond Market)
Present Discount Value
Velocity
15. Relationship among yields of different maturities of hte same type of security.
Forms of Commercial Papers
Why Revisions are issued to money data
Term Structure
Fixed Payment-Loan
16. Crucial role in creation of money
Income effect
The Preferred Habitat Approach
banks and money supply
Risk
17. 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.
Mortgage-Backed Securities
central bank
recession
Repo
18. 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.
T-Bonds
Income effect
T-Bills
Certificate of Deposit
19. Short-Term Debt Instruments
Function of Financial Intermediaries
Slope upward
Money Market
Yield Curve
20. Investors are concerned about the after tax return on bonds
tax structure
recession
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
increasing money supply
21. A dollar paid to you one year from now is less valueable than a dollar paid to you today
Present Discount Value
Coupon Bond
How Financial Markets promote economic efficiency
The Liquidity Premium Modification
22. Intermediate Yields are highest
tax structure
Humped Yield Curves
Eurobond
How do regulations ensure the soundness of Financial Intermediaries?
23. The total collection of pieces of property that serve to store value
The Expectation Approach
Income
direct impact
Wealth
24. One to Ten year maturities which fund long-term capital investments
easily standardized - widely accepted - divisible and not deteriorate quickly
Yield Curve
Banker's Acceptance
Intermediate-term Maturity (Capital Market)
25. Instrumental in moving funds between countries
unemployment rate
foreign exchange market
increasing money supply
Present Discount Value
26. The upward and downward movement of aggregate output produced in the economy.
foreign exchange market
Wealth
business cycle
Evolution of the Payment System
27. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
T-Bills
role of money
Evolution of the Payment System
Interest rate
28. Flow of earnings per unit of time
Wealth
bond market (money markets)
Present Discount Value
Income
29. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
T-Bills
Expected Return
Intermediate-term Maturity (Capital Market)
Yield on a Discount Basis
30. A debt security that promises to make payments periodically for a specified period of time.
Term structure theory
bond
When real rate is low
Discount (zero coupon) Bond
31. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
Keynesian Model
Federal Funds Market
Present Discount Value
Fisher Effect
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.
Price vs Yields to Maturity
interest rate
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
The Liquidity Premium Modification
33. Yield to maturity; a measure of an interternporal price
Interest rate
Real Interest Rate
Intermediate-term Maturity (Capital Market)
Together
34. Foreign currencies deposited in banks outside the home country.
Federal Funds Market
Store of Value
Eurocurrency
Corporate Bonds
35. 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
Eurocurrency Market
T-Bills
The Expectation Approach
36. If short-term interest rates are low than the yield curve slopes...
Upward
Yield on a Discount Basis
Eurobond
Discount (zero coupon) Bond
37. For a commodity to function efficiently as money it must be...
easily standardized - widely accepted - divisible and not deteriorate quickly
When real rate is low
T-Bills
Downward
38. Praises rising at a fast and furious pace
How Financial Markets promote economic efficiency
hyperinflation
The Expectation Approach
function of financial markets
39. Higher default risk compared to municipal Bonds
The Preferred Habitat Approach
tax structure
Downward Slopes
Corporate Bond Default risk
40. 2 -5 -10 year maturities
Kind of risk for a bond that's maturity equals the holding period
Tbonds
Interest rate
Tnotes
41. 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.
Tbonds
Term Structure
Corporate Bonds
Evolution of the Payment System
42. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
Coupon Bond
Term Structure
Evolution of the Payment System
Keynesian Model
43. Used to save purchasing power; most liquid of all assets but loses value during inflation
Money (money supply)
recession
Store of Value
easily standardized - widely accepted - divisible and not deteriorate quickly
44. Determines interest rates
bond market (money markets)
Price vs Yields to Maturity
Downward
indirect impact
45. The central bank
T-Bills
who determines our money supply
Yield on a Discount Basis
Real Interest Rate
46. Lower excess supply and lower price will fall and interest rates will rise
Humped Yield Curves
Bd < Bs
Interest rate
Use present value calculations
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.
Price-level effect
Tnotes
Keynesian Model
direct impact
48. Producing an efficient allocation of capital - which increases production
Capital Markets
Income effect
How Financial Markets promote economic efficiency
Money Market
49. Nominal interest rate is not adjusted for inflation.
Repo
Interest rate
indirect impact
How Financial Markets directly improve the well-being of consumers
50. Lower excess demand and lower price will rise and interest rates will fall
Bd > Bs
When real rate is low
Money Market
hyperinflation