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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. Comparing payoffs at different points in time
The Expectation Approach
Use present value calculations
Why Revisions are issued to money data
Ex Ante
2. Small depository institutions report infrequently and adjustments must be made for seasonal variations
The Preferred Habitat Approach
Federal Funds Market
When real rate is high
Why Revisions are issued to money data
3. Nominal interest rate is not adjusted for inflation.
Humped Yield Curves
Interest rate
Fiat Money
financial markets
4. 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.
T-Notes
increases in money supply causes
The Expectation Approach
Intermediate-term Maturity (Capital Market)
5. The total collection of pieces of property that serve to store value
business cycle
Fisher Effect
Wealth
common stock
6. More than 10 year maturities
Long-Term Maturities (Bond Market)
Banker's Acceptance
Downward
How do regulations ensure the soundness of Financial Intermediaries?
7. The return expected over the next period on one asset relative to the alternative asset.
Expected Return
Eurocurrency Market
Repo
Forms of Commercial Papers
8. Crucial role in creation of money
Together
Unit of Account
banks and money supply
Federal Funds Market
9. They channel funds from savers to investors - thereby promoting economic efficiency
who determines our money supply
OTC
financial markets
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
10. What kind of movements should we pay attention to in money supply numbers?
Long-run Movements
Supply and Demand for Bonds
Keynesian Model
unemployment rate
11. Foreign currencies deposited in banks outside the home country.
Bd < Bs
Discount (zero coupon) Bond
Eurocurrency
Yield on a Discount Basis
12. The upward and downward movement of aggregate output produced in the economy.
Downward Slopes
hyperinflation
Bd > Bs
business cycle
13. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Eurocurrency Market
Short-Term Maturity
When real rate is high
Fiat Money
14. What will investors expect for taking on higher default risk?
Mortgage-Backed Securities
Higher Returns
Commodity Money
financial markets
15. A debt security that promises to make payments periodically for a specified period of time.
Kind of risk for a bond that's maturity equals the holding period
When real rate is high
bond
Short-Term Maturity
16. Periods of declining aggregate output - unemployment high - investment is low.
Corporate Bonds
T-Bills
recession
direct impact
17. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
federal funds rate
OTC
Medium of Exchange
Downward
18. Lower excess supply and lower price will fall and interest rates will rise
Velocity
Bd < Bs
T-Bills
Function of Financial Intermediaries
19. Bringing together of buyers and sellers of financial securities to establish prices; includes banks - savings and loans - credit unions - investment banks - and brokers - mutual funds - and bond markets.
monetary policy
Real world obervations
bond market (money markets)
financial markets/institutions
20. 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.
Keynesian Model
Eurocurrency Market
common stock
Supply and Demand for Bonds
21. 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
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Term structure theory
Mortgage-Backed Securities
Upward Slops
22. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
Fisher Effect
Interest rate
Banker's Acceptance
Fiat Money
23. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Federal Funds Market
Fixed Payment-Loan
When real rate is low
unemployment rate
24. Sold in a foreign country and denominated in that country's currency.
Foreign Bonds
easily standardized - widely accepted - divisible and not deteriorate quickly
increases in money supply causes
direct impact
25. Principal plus interest paid to lender at given maturity date
Yield to Maturity for simple loans
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Federal Funds Market
Simple Loan
26. Determines interest rates
Bd < Bs
Medium of Exchange
function of financial markets
bond market (money markets)
27. Excess liquidity is spent on goods and services
business cycle
direct impact
financial markets/institutions
Velocity
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
Forms of Commercial Papers
indirect impact
Certificate of Deposit
Real world obervations
29. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.
Intermediate-term Maturity (Capital Market)
Yield on a Discount Basis
Downward
Price-level effect
30. The relationship between yield and maturity is...
M1
Higher Returns
Long-Term Maturities (Bond Market)
Not constant
31. Take the form of promissory notes - drafts - checks - and CDs
Forms of Commercial Papers
monetary policy
Long-run Movements
business cycle
32. The percent of available labor force unemployed
unemployment rate
financial markets/institutions
Humped Yield Curves
Upward
33. Short-Term Debt Instruments
Money Market
Hs a greater upward shift
Ex Post
Term structure theory
34. Used to save purchasing power; most liquid of all assets but loses value during inflation
Store of Value
Wealth
role of money
Upward
35. Instrumental in moving funds between countries
bond market (money markets)
Capital Markets
central bank
foreign exchange market
36. Bought at price below face value and face value repaid at maturity
Short-Term Maturity
Discount (zero coupon) Bond
Risk
Yield to Maturity for simple loans
37. Rare
Flat yield curves
federal funds rate
OTC
Downward Slopes
38. Yields similar for all maturities
hyperinflation
M1
Commodity Money
Flat yield curves
39. Pays owner of bond a fixed payment - until maturity when it pays off face par value
Hs a greater upward shift
Upward Slops
Coupon Bond
Function of Financial Intermediaries
40. A share of ownership in a corporation
Term structure theory
common stock
Bd < Bs
Fiat Money
41. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
Eurocurrency
hyperinflation
T-Bonds
Real Interest Rate
42. Lower the equilibrium price and interest rate.
financial markets
Expected Return
Short-Term Maturity
Bd = Bs
43. The increase in the price of set goods and services in a given economy over a period of time - the percent change.
Foreign Bonds
Medium of Exchange
Kind of risk for a bond that's maturity equals the holding period
inflation
44. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period
OTC
easily standardized - widely accepted - divisible and not deteriorate quickly
Present Discount Value
Velocity
45. 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.
T-Bills
Evolution of the Payment System
direct impact
central bank
46. The degree of uncertainty associated with the return on one asset relative to alternative assets.
hyperinflation
How Financial Markets directly improve the well-being of consumers
Risk
banks and money supply
47. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
Intermediate-term Maturity (Capital Market)
T-Bonds
Evolution of the Payment System
banks and money supply
48. It will shift it to the right.
Yield Curve
Downward Slopes
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Medium of Exchange
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.
Medium of Exchange
indirect impact
Bd < Bs
Corporate Bonds
50. Cost of borrowing money - expressed as a percentage of the amount borrowed per year.
Commodity Money
How Financial Markets directly improve the well-being of consumers
How do regulations ensure the soundness of Financial Intermediaries?
interest rate