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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. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
Downward Slopes
federal funds rate
unemployment rate
indirect impact
2. 2 -5 -10 year maturities
Interest rate
foreign exchange market
Tnotes
Long-Term Maturities (Bond Market)
3. Lower excess supply and lower price will fall and interest rates will rise
The Liquidity Premium Modification
Bd < Bs
Eurocurrency Market
Money (money supply)
4. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
Evolution of the Payment System
Slope upward
Interest rate
indirect impact
5. What will investors expect for taking on higher default risk?
Higher Returns
T-Bills
The Expectation Approach
Long-Term Maturities (Bond Market)
6. Relationship among yields of different maturities of hte same type of security.
Foreign Bonds
Hs a greater upward shift
Term Structure
Short-Term Maturity
7. Principal plus interest paid to lender at given maturity date
Federal Funds Market
Simple Loan
Forms of Commercial Papers
Bd > Bs
8. Bond denominated in a currency other than that of the country in which it is sold.
direct impact
How Financial Markets promote economic efficiency
Eurobond
Humped Yield Curves
9. 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
T-Bills
The Preferred Habitat Approach
Real Interest Rate
Corporate Bond Default risk
10. 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.
Supply and Demand for Bonds
Wealth
increasing money supply
increases in money supply causes
11. They have a higher interest-rate risk.
Present Discount Value
Why returns are more volatile for Long-Term bonds
Interest rate
Velocity
12. The return expected over the next period on one asset relative to the alternative asset.
financial markets
Expected Return
Repo
Money (money supply)
13. Investors are concerned about the after tax return on bonds
tax structure
Use present value calculations
Money Market
foreign exchange market
14. Interest rate that equates today's value with present value of all future payments.
Bd > Bs
Interest rate
Coupon Bond
Yield to Maturity for simple loans
15. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
T-Bills
Ex Ante
Interest rate
Commodity Money
16. They channel funds from savers to investors - thereby promoting economic efficiency
Ex Ante
OTC
financial markets
Flat yield curves
17. Take the form of promissory notes - drafts - checks - and CDs
recession
Forms of Commercial Papers
Discount (zero coupon) Bond
Yield Curve
18. Most Common
Unit of Account
Upward Slops
Eurocurrency Market
Velocity
19. Yield to maturity; a measure of an interternporal price
Forms of Commercial Papers
monetary policy
Interest rate
When real rate is high
20. 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)
Tnotes
M1
Forms of Commercial Papers
Keynesian Model
21. Lower transaction costs - reduce risk - asymmetric information.
foreign exchange market
Corporate Bond Default risk
Function of Financial Intermediaries
Fiat Money
22. The upward and downward movement of aggregate output produced in the economy.
Kind of risk for a bond that's maturity equals the holding period
business cycle
Foreign Bonds
easily standardized - widely accepted - divisible and not deteriorate quickly
23. 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
24. A share of ownership in a corporation
How Financial Markets directly improve the well-being of consumers
Eurocurrency
common stock
Tnotes
25. The increase in the price of set goods and services in a given economy over a period of time - the percent change.
inflation
interest rate
T-Bills
Simple Loan
26. Short-Term Debt Instruments
Money Market
who determines our money supply
Risk
increasing money supply
27. 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.
who determines our money supply
Slope upward
Yield to Maturity for simple loans
financial markets/institutions
28. Higher default risk compared to municipal Bonds
When real rate is low
Corporate Bond Default risk
Money (money supply)
Yield to Maturity for simple loans
29. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Medium of Exchange
Fiat Money
Simple Loan
Keynesian Model
30. Yields similar for all maturities
Federal Funds Market
Flat yield curves
Eurocurrency
direct impact
31. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
Certificate of Deposit
T-Bonds
business cycle
Banker's Acceptance
32. Reduces adverse selection - moral hazard - and insider trading.
Regulations increase information available to investors which does what?
Term Structure
Hs a greater upward shift
tax structure
33. Excess liquidity is spent on goods and services
bond market (money markets)
direct impact
financial markets
Income
34. Comparing payoffs at different points in time
role of money
Yield to Maturity for simple loans
Use present value calculations
How Financial Markets directly improve the well-being of consumers
35. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
When real rate is high
Store of Value
hyperinflation
function of financial markets
36. Rare
Corporate Bonds
Downward Slopes
Term structure theory
Discount (zero coupon) Bond
37. 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 Curve
Flat yield curves
Forms of Commercial Papers
Price vs Yields to Maturity
38. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Fixed Payment-Loan
Downward
T-Bills
T-Bills
39. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Downward Slopes
Intermediate-term Maturity (Capital Market)
Slope upward
Money (money supply)
40. Held for one- ten years.
T-Notes
Intermediate-term Maturity (Capital Market)
hyperinflation
Corporate Bonds
41. Intermediate Yields are highest
When real rate is high
Humped Yield Curves
direct impact
When real rate is low
42. Used to save purchasing power; most liquid of all assets but loses value during inflation
Income
increasing money supply
Store of Value
Mortgage-Backed Securities
43. Lower the equilibrium price and interest rate.
When real rate is high
Yield Curve
Bd = Bs
hyperinflation
44. Greater incentive to borrow and less to lend.
Eurocurrency Market
Long-run Movements
business cycle
When real rate is low
45. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.
central bank
Eurocurrency Market
When real rate is low
Yield on a Discount Basis
46. If the short-term interest rates are high than the yield curve slopes?
Downward
Unit of Account
financial markets
Real Interest Rate
47. Financial instruments whose return is based on the underlying returns on mortgage loans.
Mortgage-Backed Securities
hyperinflation
central bank
Real Interest Rate
48. 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
Not constant
Term structure theory
Why Revisions are issued to money data
T-Bills
49. What kind of movements should we pay attention to in money supply numbers?
Long-run Movements
monetary policy
Fisher Effect
Yield Curve
50. Long-Term Debt and Equity Instruments
Regulations increase information available to investors which does what?
Medium of Exchange
Upward
Capital Markets