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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. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.






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






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






4. The relationship between yield and maturity is...






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






6. Crucial role in creation of money






7. Lower the equilibrium price and interest rate.






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






9. Yields similar for all maturities






10. 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






11. Many lead to more employment and output






12. Excess liquidity is spent on goods and services






13. 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






14. Investors are concerned about the after tax return on bonds






15. More than 10 year maturities






16. Allowing consumers to time their purchases better.






17. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.






18. Most Common






19. Paper currency - has no real value






20. The total collection of pieces of property that serve to store value






21. A dollar paid to you one year from now is less valueable than a dollar paid to you today






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






23. A share of ownership in a corporation






24. 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.






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






26. Used to measure value in the economy






27. Praises rising at a fast and furious pace






28. 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.






29. Intermediate Yields are highest






30. The degree of uncertainty associated with the return on one asset relative to alternative assets.






31. They channel funds from savers to investors - thereby promoting economic efficiency






32. 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.






33. Real interest rate: the real interest rate actually realized.






34. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.






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






36. 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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37. No interest- rate risk

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38. 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.






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






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)






41. Held for one- ten years.






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






43. A debt security that promises to make payments periodically for a specified period of time.






44. Yield curves most always...






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






46. Less than one year and service current liquidity needs






47. 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.






48. The return expected over the next period on one asset relative to the alternative asset.






49. If the short-term interest rates are high than the yield curve slopes?






50. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.