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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. Flow of earnings per unit of time
financial markets
Term structure theory
Income
direct impact
2. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
Federal Funds Market
federal funds rate
Evolution of the Payment System
T-Bills
3. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Why Revisions are issued to money data
Medium of Exchange
The Expectation Approach
tax structure
4. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
financial markets
interest rate
role of money
bond
5. One to Ten year maturities which fund long-term capital investments
direct impact
Yield Curve
The Preferred Habitat Approach
Intermediate-term Maturity (Capital Market)
6. 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.
OTC
federal funds rate
The Liquidity Premium Modification
T-Bonds
7. If the short-term interest rates are high than the yield curve slopes?
Tnotes
Downward
easily standardized - widely accepted - divisible and not deteriorate quickly
increasing money supply
8. Pays owner of bond a fixed payment - until maturity when it pays off face par value
common stock
Interest rate
Coupon Bond
Income effect
9. For a commodity to function efficiently as money it must be...
easily standardized - widely accepted - divisible and not deteriorate quickly
Mortgage-Backed Securities
Money (money supply)
Tnotes
10. It determines the equilibrium interest rate in terms of the supply of land demanded for money . People store their wealth in money and bonds. If the market for money is in equilibrium (Ms=Md) then the bond markets are also in equilibrium (Bs=Bd)
Forms of Commercial Papers
Yield Curve
Mortgage-Backed Securities
Keynesian Model
11. They channel funds from savers to investors - thereby promoting economic efficiency
Upward
Downward Slopes
Price vs Yields to Maturity
financial markets
12. Producing an efficient allocation of capital - which increases production
How Financial Markets promote economic efficiency
Price-level effect
Ex Ante
common stock
13. Principal plus interest paid to lender at given maturity date
Income effect
Banker's Acceptance
Simple Loan
Tnotes
14. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
Foreign Bonds
Term Structure
function of financial markets
Long-run Movements
15. 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
Ex Post
Income effect
Store of Value
Real world obervations
16. 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.
Yield on a Discount Basis
Term Structure
Price vs Yields to Maturity
Not constant
17. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
interest rate
Money (money supply)
Eurocurrency
Keynesian Model
18. The relationship between yield and maturity is...
Not constant
Unit of Account
When real rate is low
Fiat Money
19. Financial instruments whose return is based on the underlying returns on mortgage loans.
Mortgage-Backed Securities
The Expectation Approach
Store of Value
Real world obervations
20. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
When real rate is low
The Preferred Habitat Approach
Real Interest Rate
Fisher Effect
21. If short-term interest rates are low than the yield curve slopes...
Function of Financial Intermediaries
Banker's Acceptance
recession
Upward
22. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits
Eurobond
Use present value calculations
How Financial Markets directly improve the well-being of consumers
M1
23. Yields similar for all maturities
Flat yield curves
Hs a greater upward shift
Present Discount Value
tax structure
24. The higher the default risk means the yield curve...
Interest rate
Simple Loan
Hs a greater upward shift
Regulations increase information available to investors which does what?
25. Used to save purchasing power; most liquid of all assets but loses value during inflation
central bank
When real rate is low
The Liquidity Premium Modification
Store of Value
26. The increase in the price of set goods and services in a given economy over a period of time - the percent change.
who determines our money supply
inflation
banks and money supply
Commodity Money
27. They have a higher interest-rate risk.
role of money
How Financial Markets promote economic efficiency
Ex Post
Why returns are more volatile for Long-Term bonds
28. More than 10 year maturities
Long-Term Maturities (Bond Market)
Simple Loan
Term Structure
Evolution of the Payment System
29. Lower excess demand and lower price will rise and interest rates will fall
Bd > Bs
indirect impact
Intermediate-term Maturity (Capital Market)
The Preferred Habitat Approach
30. Nominal interest rate is not adjusted for inflation.
who determines our money supply
Capital Markets
T-Notes
Interest rate
31. Allowing consumers to time their purchases better.
Ex Post
How Financial Markets directly improve the well-being of consumers
Certificate of Deposit
increases in money supply causes
32. Praises rising at a fast and furious pace
federal funds rate
Certificate of Deposit
hyperinflation
Yield to Maturity for simple loans
33. The percent of available labor force unemployed
The Preferred Habitat Approach
Why returns are more volatile for Long-Term bonds
unemployment rate
Keynesian Model
34. Sold in a foreign country and denominated in that country's currency.
Use present value calculations
Price vs Yields to Maturity
Foreign Bonds
Yield on a Discount Basis
35. Used to measure value in the economy
business cycle
Why returns are more volatile for Long-Term bonds
Unit of Account
Money Market
36. 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.
Present Discount Value
Federal Funds Market
Kind of risk for a bond that's maturity equals the holding period
Discount (zero coupon) Bond
37. Crucial role in creation of money
T-Bills
Federal Funds Market
banks and money supply
Long-run Movements
38. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Fixed Payment-Loan
Short-Term Maturity
indirect impact
Corporate Bond Default risk
39. Real interest rate: the real interest rate actually realized.
inflation
Coupon Bond
Ex Post
Hs a greater upward shift
40. Instrumental in moving funds between countries
Price vs Yields to Maturity
Keynesian Model
foreign exchange market
Present Discount Value
41. Precious Metals or another valueable commodity
easily standardized - widely accepted - divisible and not deteriorate quickly
Use present value calculations
Commodity Money
Supply and Demand for Bonds
42. Influence on business cycle - inflation - interest rates
Foreign Bonds
monetary policy
Eurocurrency Market
Certificate of Deposit
43. 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.
When real rate is low
Present Discount Value
How Financial Markets directly improve the well-being of consumers
Supply and Demand for Bonds
44. Yield to maturity; a measure of an interternporal price
Expected Return
Interest rate
Wealth
Yield Curve
45. 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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46. 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.
easily standardized - widely accepted - divisible and not deteriorate quickly
Corporate Bonds
Present Discount Value
Bd = Bs
47. Periods of declining aggregate output - unemployment high - investment is low.
Real world obervations
recession
Expected Return
Higher Returns
48. Most Common
Wealth
Tbonds
Eurocurrency Market
Upward Slops
49. Foreign currencies deposited in banks outside the home country.
How Financial Markets promote economic efficiency
Bd = Bs
Eurocurrency
increases in money supply causes
50. 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.
business cycle
Why returns are more volatile for Long-Term bonds
Price-level effect
Use present value calculations