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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. Lower the equilibrium price and interest rate.
Intermediate-term Maturity (Capital Market)
Eurocurrency
Bd = Bs
Yield to Maturity for simple loans
2. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
business cycle
Evolution of the Payment System
Short-Term Maturity
recession
3. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
bond
How do regulations ensure the soundness of Financial Intermediaries?
financial markets
Kind of risk for a bond that's maturity equals the holding period
4. The central bank
Price vs Yields to Maturity
Short-Term Maturity
Certificate of Deposit
who determines our money supply
5. 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
Yield Curve
hyperinflation
T-Notes
6. Comparing payoffs at different points in time
Use present value calculations
T-Notes
Hs a greater upward shift
T-Bills
7. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
who determines our money supply
Interest rate
Money (money supply)
Yield to Maturity for simple loans
8. A share of ownership in a corporation
T-Bonds
Flat yield curves
common stock
Income
9. A higher level of income causes the demand for money at each interest rate to increase and the demand curve to shift to the right.
Income effect
Coupon Bond
increases in money supply causes
Commodity Money
10. More than 10 year maturities
Long-Term Maturities (Bond Market)
Fixed Payment-Loan
Higher Returns
Keynesian Model
11. Take the form of promissory notes - drafts - checks - and CDs
Forms of Commercial Papers
Unit of Account
Long-Term Maturities (Bond Market)
Eurobond
12. Periods of declining aggregate output - unemployment high - investment is low.
Higher Returns
Eurocurrency
Mortgage-Backed Securities
recession
13. The return expected over the next period on one asset relative to the alternative asset.
indirect impact
Expected Return
Evolution of the Payment System
Humped Yield Curves
14. If the short-term interest rates are high than the yield curve slopes?
M1
Downward
foreign exchange market
T-Bills
15. Investors are concerned about the after tax return on bonds
Higher Returns
Ex Post
tax structure
Store of Value
16. Alters publics liquidity and influences spending through portfolio adjustment
Real Interest Rate
increases in money supply causes
Certificate of Deposit
Long-Term Maturities (Bond Market)
17. Paper currency - has no real value
Fiat Money
Money Market
tax structure
banks and money supply
18. Short-Term Debt Instruments
Tnotes
Money Market
Higher Returns
Eurocurrency Market
19. Sold in a foreign country and denominated in that country's currency.
Foreign Bonds
How do regulations ensure the soundness of Financial Intermediaries?
easily standardized - widely accepted - divisible and not deteriorate quickly
When real rate is low
20. Intermediate Yields are highest
Price vs Yields to Maturity
Humped Yield Curves
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Not constant
21. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
indirect impact
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Supply and Demand for Bonds
The Preferred Habitat Approach
22. What will investors expect for taking on higher default risk?
Price-level effect
Higher Returns
Eurobond
T-Bonds
23. 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
monetary policy
The Liquidity Premium Modification
Hs a greater upward shift
Term structure theory
24. Reduces adverse selection - moral hazard - and insider trading.
Repo
When real rate is high
Yield Curve
Regulations increase information available to investors which does what?
25. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Ex Ante
Unit of Account
indirect impact
M1
26. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
Short-Term Maturity
T-Bonds
Fixed Payment-Loan
T-Bills
27. Instrumental in moving funds between countries
foreign exchange market
Income effect
T-Notes
federal funds rate
28. Financial instruments whose return is based on the underlying returns on mortgage loans.
Mortgage-Backed Securities
common stock
tax structure
Term structure theory
29. The higher the default risk means the yield curve...
Hs a greater upward shift
Discount (zero coupon) Bond
federal funds rate
Short-Term Maturity
30. Producing an efficient allocation of capital - which increases production
How Financial Markets promote economic efficiency
Simple Loan
Supply and Demand for Bonds
When real rate is high
31. Flow of earnings per unit of time
Higher Returns
Unit of Account
direct impact
Income
32. One to Ten year maturities which fund long-term capital investments
Capital Markets
hyperinflation
Intermediate-term Maturity (Capital Market)
monetary policy
33. They have a higher interest-rate risk.
Why returns are more volatile for Long-Term bonds
Real world obervations
bond
Intermediate-term Maturity (Capital Market)
34. Long-Term Debt and Equity Instruments
Slope upward
Long-Term Maturities (Bond Market)
monetary policy
Capital Markets
35. A debt security that promises to make payments periodically for a specified period of time.
Upward Slops
bond
When real rate is low
Present Discount Value
36. Small depository institutions report infrequently and adjustments must be made for seasonal variations
Unit of Account
Yield Curve
Why Revisions are issued to money data
financial markets
37. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
The Liquidity Premium Modification
Yield Curve
Discount (zero coupon) Bond
function of financial markets
38. Used to save purchasing power; most liquid of all assets but loses value during inflation
Store of Value
bond
Price-level effect
OTC
39. It will shift it to the right.
T-Notes
Banker's Acceptance
Keynesian Model
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
40. Yield curves most always...
bond
banks and money supply
Slope upward
Regulations increase information available to investors which does what?
41. 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
banks and money supply
Not constant
Real world obervations
federal funds rate
42. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Medium of Exchange
Real world obervations
function of financial markets
Risk
43. If short-term interest rates are low than the yield curve slopes...
foreign exchange market
T-Bills
Upward
Wealth
44. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
Banker's Acceptance
Real Interest Rate
Kind of risk for a bond that's maturity equals the holding period
Supply and Demand for Bonds
45. No interest- rate risk
46. Most Common
Discount (zero coupon) Bond
Present Discount Value
indirect impact
Upward Slops
47. The relationship between yield and maturity is...
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
T-Bills
T-Bonds
Not constant
48. Foreign currencies deposited in banks outside the home country.
Interest rate
Long-Term Maturities (Bond Market)
Eurocurrency
Corporate Bonds
49. 2 -5 -10 year maturities
Tnotes
Mortgage-Backed Securities
Evolution of the Payment System
T-Bills
50. Determines interest rates
foreign exchange market
Wealth
Keynesian Model
bond market (money markets)