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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. 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.
easily standardized - widely accepted - divisible and not deteriorate quickly
Supply and Demand for Bonds
inflation
T-Bonds
2. Producing an efficient allocation of capital - which increases production
Eurocurrency
Fiat Money
How Financial Markets promote economic efficiency
Bd > Bs
3. Lower the equilibrium price and interest rate.
Velocity
Mortgage-Backed Securities
Bd = Bs
Term structure theory
4. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Money (money supply)
Yield Curve
Function of Financial Intermediaries
Real Interest Rate
5. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
Term structure theory
Fiat Money
Slope upward
Fisher Effect
6. Does not deal directly with the public and responsible for executing of the national monetary policy; implements policy by altering money supply and influencing bank behavior.
Kind of risk for a bond that's maturity equals the holding period
central bank
Keynesian Model
Price-level effect
7. For a commodity to function efficiently as money it must be...
increasing money supply
easily standardized - widely accepted - divisible and not deteriorate quickly
federal funds rate
Keynesian Model
8. Bond denominated in a currency other than that of the country in which it is sold.
Eurobond
Eurocurrency Market
Forms of Commercial Papers
Interest rate
9. Nominal interest rate is not adjusted for inflation.
Simple Loan
Upward Slops
Bd > Bs
Interest rate
10. 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.
T-Bills
The Expectation Approach
Function of Financial Intermediaries
Eurobond
11. Investors are concerned about the after tax return on bonds
tax structure
Store of Value
Bd < Bs
unemployment rate
12. 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
Ex Post
The Preferred Habitat Approach
bond market (money markets)
T-Bills
13. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
Why Revisions are issued to money data
Mortgage-Backed Securities
T-Bills
Why returns are more volatile for Long-Term bonds
14. The central bank
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
who determines our money supply
Slope upward
bond
15. No interest- rate risk
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16. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
Income effect
The Expectation Approach
Discount (zero coupon) Bond
T-Bonds
17. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
Humped Yield Curves
Federal Funds Market
function of financial markets
How Financial Markets promote economic efficiency
18. Lower excess demand and lower price will rise and interest rates will fall
Yield Curve
Foreign Bonds
Bd > Bs
Unit of Account
19. A debt security that promises to make payments periodically for a specified period of time.
Ex Ante
bond
Money Market
Income
20. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Income effect
Upward Slops
The Expectation Approach
Ex Ante
21. Lower transaction costs - reduce risk - asymmetric information.
Money (money supply)
Function of Financial Intermediaries
Why Revisions are issued to money data
Yield to Maturity for simple loans
22. The total collection of pieces of property that serve to store value
Downward
Wealth
hyperinflation
Together
23. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits
Long-Term Maturities (Bond Market)
M1
Hs a greater upward shift
Humped Yield Curves
24. If the short-term interest rates are high than the yield curve slopes?
monetary policy
Downward
recession
How Financial Markets directly improve the well-being of consumers
25. Short-Term Debt Instruments
Downward Slopes
Money Market
financial markets
easily standardized - widely accepted - divisible and not deteriorate quickly
26. Bought at price below face value and face value repaid at maturity
common stock
Yield to Maturity for simple loans
Discount (zero coupon) Bond
Humped Yield Curves
27. The upward and downward movement of aggregate output produced in the economy.
Fixed Payment-Loan
easily standardized - widely accepted - divisible and not deteriorate quickly
When real rate is low
business cycle
28. Held for one- ten years.
federal funds rate
Commodity Money
Not constant
T-Notes
29. Long-Term Debt and Equity Instruments
Hs a greater upward shift
Bd < Bs
Tbonds
Capital Markets
30. Instrumental in moving funds between countries
Yield Curve
foreign exchange market
Fisher Effect
Store of Value
31. Allowing consumers to time their purchases better.
Evolution of the Payment System
M1
How Financial Markets directly improve the well-being of consumers
easily standardized - widely accepted - divisible and not deteriorate quickly
32. Periods of declining aggregate output - unemployment high - investment is low.
Tnotes
Kind of risk for a bond that's maturity equals the holding period
Yield on a Discount Basis
recession
33. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
Short-Term Maturity
Commodity Money
bond
indirect impact
34. The higher the default risk means the yield curve...
banks and money supply
Hs a greater upward shift
who determines our money supply
Higher Returns
35. 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
Yield Curve
The Expectation Approach
hyperinflation
Real world obervations
36. 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.
Evolution of the Payment System
Fisher Effect
Corporate Bonds
financial markets
37. The return expected over the next period on one asset relative to the alternative asset.
Expected Return
The Liquidity Premium Modification
Keynesian Model
Certificate of Deposit
38. What will investors expect for taking on higher default risk?
Higher Returns
Velocity
Coupon Bond
T-Bonds
39. 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.
Tnotes
Income effect
Long-Term Maturities (Bond Market)
The Liquidity Premium Modification
40. Lower Incentive to borrow but a greater incentive to lend.
Medium of Exchange
When real rate is high
Tbonds
Capital Markets
41. 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
Real Interest Rate
Humped Yield Curves
Fiat Money
Term structure theory
42. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
OTC
bond market (money markets)
role of money
Humped Yield Curves
43. 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.
banks and money supply
Why returns are more volatile for Long-Term bonds
Certificate of Deposit
How Financial Markets directly improve the well-being of consumers
44. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
role of money
Yield Curve
Supply and Demand for Bonds
OTC
45. 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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46. 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)
Store of Value
Long-run Movements
Keynesian Model
Federal Funds Market
47. 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.
Income
Capital Markets
The Expectation Approach
T-Bills
48. What kind of movements should we pay attention to in money supply numbers?
Repo
OTC
bond
Long-run Movements
49. The relationship between yield and maturity is...
Not constant
easily standardized - widely accepted - divisible and not deteriorate quickly
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
OTC
50. Crucial role in creation of money
business cycle
Yield on a Discount Basis
banks and money supply
Capital Markets