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DSST Money And Banking

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. Producing an efficient allocation of capital - which increases production






2. Cost of borrowing money - expressed as a percentage of the amount borrowed per year.






3. Intermediate Yields are highest






4. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






5. Small depository institutions report infrequently and adjustments must be made for seasonal variations






6. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept






7. Influence on business cycle - inflation - interest rates






8. Lower excess demand and lower price will rise and interest rates will fall






9. Alters publics liquidity and influences spending through portfolio adjustment






10. Yields similar for all maturities






11. The central bank






12. 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.






13. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money






14. One to Ten year maturities which fund long-term capital investments






15. They have a higher interest-rate risk.






16. Yield curves most always...






17. Lower transaction costs - reduce risk - asymmetric information.






18. Reduces adverse selection - moral hazard - and insider trading.






19. Many lead to more employment and output






20. Promotes economic efficiency by minimizing the time spent in exchanging goods and services






21. Used to measure value in the economy






22. The upward and downward movement of aggregate output produced in the economy.






23. Periods of declining aggregate output - unemployment high - investment is low.






24. 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.






25. Less than one year and service current liquidity needs






26. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits






27. 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.






28. 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






29. 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.






30. A share of ownership in a corporation






31. Financial instruments whose return is based on the underlying returns on mortgage loans.






32. Sold in a foreign country and denominated in that country's currency.






33. Instrumental in moving funds between countries






34. Bought at price below face value and face value repaid at maturity






35. The interest rate at which private depository institutions lend balances to other depository institutions usually over night






36. How interest rates on bonds of different maturities move over time






37. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.






38. 3 -6 -12 month securities with no explicit one payment and is sold at a discount. These securities are highly liquid - and can be traded in the secondary market. These are some of the safest securities.






39. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.






40. Used to save purchasing power; most liquid of all assets but loses value during inflation






41. Nominal interest rate is not adjusted for inflation.






42. Medium of exchange; unit of account; store of value; increases the liquidity in the economy






43. Precious Metals or another valueable commodity






44. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One






45. Lower Incentive to borrow but a greater incentive to lend.






46. 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






47. Higher default risk compared to municipal Bonds






48. The percent of available labor force unemployed






49. 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.






50. The higher the default risk means the yield curve...