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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. How interest rates on bonds of different maturities move over time
Repo
Why returns are more volatile for Long-Term bonds
Fisher Effect
Together
2. Lower transaction costs - reduce risk - asymmetric information.
Eurobond
Function of Financial Intermediaries
Capital Markets
increasing money supply
3. Reduces adverse selection - moral hazard - and insider trading.
Regulations increase information available to investors which does what?
Function of Financial Intermediaries
unemployment rate
federal funds rate
4. They channel funds from savers to investors - thereby promoting economic efficiency
Coupon Bond
financial markets
How do regulations ensure the soundness of Financial Intermediaries?
Bd > Bs
5. Paper currency - has no real value
Price vs Yields to Maturity
Use present value calculations
Fiat Money
Corporate Bonds
6. Used to measure value in the economy
Ex Post
Unit of Account
When real rate is low
Eurocurrency
7. Flow of earnings per unit of time
Hs a greater upward shift
Income
foreign exchange market
Income effect
8. Short-Term securities are very good substitutes for each other within investor's portfolios who collectively impact the market. There aren't separate markets for short-term and long-term securities - there is one single market.
The Expectation Approach
Yield on a Discount Basis
Downward
unemployment rate
9. 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.
The Liquidity Premium Modification
Slope upward
Tnotes
M1
10. Allowing consumers to time their purchases better.
Price-level effect
How Financial Markets directly improve the well-being of consumers
Yield to Maturity for simple loans
Long-Term Maturities (Bond Market)
11. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
Short-Term Maturity
Banker's Acceptance
Discount (zero coupon) Bond
How do regulations ensure the soundness of Financial Intermediaries?
12. Determines interest rates
Interest rate
Function of Financial Intermediaries
bond market (money markets)
Risk
13. Instrumental in moving funds between countries
Bd = Bs
Keynesian Model
Term structure theory
foreign exchange market
14. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Fixed Payment-Loan
Interest rate
Unit of Account
bond market (money markets)
15. The percent of available labor force unemployed
Long-Term Maturities (Bond Market)
role of money
unemployment rate
Yield to Maturity for simple loans
16. (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 high
Term Structure
Real Interest Rate
Store of Value
17. If short-term interest rates are low than the yield curve slopes...
business cycle
indirect impact
Upward
Bd < Bs
18. Bond denominated in a currency other than that of the country in which it is sold.
Eurobond
The Expectation Approach
Term structure theory
Term Structure
19. A dollar paid to you one year from now is less valueable than a dollar paid to you today
Long-Term Maturities (Bond Market)
Present Discount Value
Yield on a Discount Basis
T-Notes
20. Seller will buy back the asset at a later date and typically at a higher price. These securities are usually government securities and are used by banks and Large Corporations.
Repo
Regulations increase information available to investors which does what?
Velocity
Bd < Bs
21. 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
The Preferred Habitat Approach
T-Bills
Federal Funds Market
Long-Term Maturities (Bond Market)
22. Crucial role in creation of money
Coupon Bond
Commodity Money
Price-level effect
banks and money supply
23. Bought at price below face value and face value repaid at maturity
Upward Slops
Corporate Bonds
increases in money supply causes
Discount (zero coupon) Bond
24. Interest rate that equates today's value with present value of all future payments.
Supply and Demand for Bonds
Yield to Maturity for simple loans
Tnotes
inflation
25. No interest- rate risk
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26. Financial instruments whose return is based on the underlying returns on mortgage loans.
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
recession
Mortgage-Backed Securities
Velocity
27. One to Ten year maturities which fund long-term capital investments
Intermediate-term Maturity (Capital Market)
Commodity Money
Forms of Commercial Papers
Supply and Demand for Bonds
28. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Unit of Account
Long-Term Maturities (Bond Market)
Money (money supply)
Slope upward
29. Alters publics liquidity and influences spending through portfolio adjustment
Corporate Bond Default risk
increases in money supply causes
indirect impact
Eurocurrency
30. More than 10 year maturities
Long-Term Maturities (Bond Market)
Interest rate
Short-Term Maturity
Income effect
31. Take the form of promissory notes - drafts - checks - and CDs
Forms of Commercial Papers
hyperinflation
Eurobond
Downward Slopes
32. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
role of money
who determines our money supply
Income effect
Supply and Demand for Bonds
33. 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.
Commodity Money
foreign exchange market
Together
Price vs Yields to Maturity
34. Relationship among yields of different maturities of hte same type of security.
Ex Post
Term Structure
M1
Discount (zero coupon) Bond
35. Yield to maturity; a measure of an interternporal price
Real Interest Rate
Medium of Exchange
Use present value calculations
Interest rate
36. Less than one year and service current liquidity needs
Store of Value
Short-Term Maturity
Upward
Regulations increase information available to investors which does what?
37. 30 year maturities but not since 2001
federal funds rate
Tbonds
Commodity Money
recession
38. The return expected over the next period on one asset relative to the alternative asset.
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Coupon Bond
Upward Slops
Expected Return
39. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
Ex Ante
Hs a greater upward shift
function of financial markets
T-Bonds
40. 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)
easily standardized - widely accepted - divisible and not deteriorate quickly
Keynesian Model
increasing money supply
T-Notes
41. Producing an efficient allocation of capital - which increases production
Fiat Money
Velocity
Ex Ante
How Financial Markets promote economic efficiency
42. Rare
Fisher Effect
Downward Slopes
bond market (money markets)
M1
43. Lower the equilibrium price and interest rate.
hyperinflation
Bd = Bs
Yield Curve
Term structure theory
44. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
Income
Yield Curve
Downward Slopes
T-Bills
45. Short-Term Debt Instruments
Money Market
Downward Slopes
Not constant
financial markets
46. Most Common
Upward Slops
Ex Post
common stock
interest rate
47. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits
M1
Yield Curve
tax structure
Wealth
48. What kind of movements should we pay attention to in money supply numbers?
Ex Ante
Hs a greater upward shift
Long-run Movements
indirect impact
49. The upward and downward movement of aggregate output produced in the economy.
business cycle
central bank
Why Revisions are issued to money data
OTC
50. The higher the default risk means the yield curve...
tax structure
Price-level effect
common stock
Hs a greater upward shift