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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. A dollar paid to you one year from now is less valueable than a dollar paid to you today
Kind of risk for a bond that's maturity equals the holding period
Present Discount Value
Together
Income
2. 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.
Wealth
Expected Return
OTC
Downward
3. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
How do regulations ensure the soundness of Financial Intermediaries?
Long-Term Maturities (Bond Market)
Real Interest Rate
Banker's Acceptance
4. The increase in the price of set goods and services in a given economy over a period of time - the percent change.
Fiat Money
Ex Ante
inflation
Higher Returns
5. Lower excess demand and lower price will rise and interest rates will fall
Bd > Bs
Bd < Bs
Federal Funds Market
Why Revisions are issued to money data
6. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
bond
banks and money supply
Foreign Bonds
How do regulations ensure the soundness of Financial Intermediaries?
7. One to Ten year maturities which fund long-term capital investments
Income effect
M1
Intermediate-term Maturity (Capital Market)
Eurobond
8. Nominal interest rate is not adjusted for inflation.
Fiat Money
Discount (zero coupon) Bond
Interest rate
Risk
9. 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.
Eurobond
indirect impact
Income effect
OTC
10. 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.
Bd = Bs
increasing money supply
Certificate of Deposit
Function of Financial Intermediaries
11. Real interest rate: the real interest rate actually realized.
Real Interest Rate
Why returns are more volatile for Long-Term bonds
T-Notes
Ex Post
12. The total collection of pieces of property that serve to store value
Slope upward
Real Interest Rate
Kind of risk for a bond that's maturity equals the holding period
Wealth
13. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Upward Slops
Eurocurrency Market
Yield Curve
hyperinflation
14. 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.
Mortgage-Backed Securities
financial markets/institutions
Upward Slops
Why Revisions are issued to money data
15. Instrumental in moving funds between countries
Tnotes
The Preferred Habitat Approach
foreign exchange market
Hs a greater upward shift
16. No interest- rate risk
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17. 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.
Evolution of the Payment System
Long-Term Maturities (Bond Market)
The Expectation Approach
Certificate of Deposit
18. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
Forms of Commercial Papers
Corporate Bond Default risk
Fisher Effect
Money Market
19. Most Common
Supply and Demand for Bonds
inflation
Use present value calculations
Upward Slops
20. Used to save purchasing power; most liquid of all assets but loses value during inflation
How Financial Markets promote economic efficiency
tax structure
Store of Value
Upward Slops
21. 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.
central bank
Present Discount Value
business cycle
The Liquidity Premium Modification
22. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
direct impact
How Financial Markets directly improve the well-being of consumers
bond
Evolution of the Payment System
23. Lower Incentive to borrow but a greater incentive to lend.
Repo
Fixed Payment-Loan
When real rate is high
unemployment rate
24. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
The Expectation Approach
When real rate is high
Term structure theory
role of money
25. The central bank
Banker's Acceptance
Intermediate-term Maturity (Capital Market)
who determines our money supply
Store of Value
26. 30 year maturities but not since 2001
Interest rate
Humped Yield Curves
OTC
Tbonds
27. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
banks and money supply
Income
Function of Financial Intermediaries
indirect impact
28. The percent of available labor force unemployed
Bd < Bs
M1
unemployment rate
Why returns are more volatile for Long-Term bonds
29. For a commodity to function efficiently as money it must be...
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Eurobond
bond market (money markets)
easily standardized - widely accepted - divisible and not deteriorate quickly
30. Greater incentive to borrow and less to lend.
When real rate is low
monetary policy
Fixed Payment-Loan
Slope upward
31. If short-term interest rates are low than the yield curve slopes...
common stock
Upward
Use present value calculations
Kind of risk for a bond that's maturity equals the holding period
32. Excess liquidity is spent on goods and services
direct impact
hyperinflation
Income
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
33. Many lead to more employment and output
Simple Loan
increasing money supply
Fisher Effect
T-Bills
34. Yield curves most always...
Intermediate-term Maturity (Capital Market)
Slope upward
who determines our money supply
Bd > Bs
35. The higher the default risk means the yield curve...
financial markets/institutions
Commodity Money
Hs a greater upward shift
T-Bonds
36. Principal plus interest paid to lender at given maturity date
Long-run Movements
Simple Loan
Yield to Maturity for simple loans
Bd > Bs
37. Producing an efficient allocation of capital - which increases production
Bd = Bs
Real Interest Rate
How Financial Markets promote economic efficiency
Term Structure
38. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
function of financial markets
How do regulations ensure the soundness of Financial Intermediaries?
common stock
Evolution of the Payment System
39. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Ex Ante
unemployment rate
federal funds rate
hyperinflation
40. 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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41. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period
Kind of risk for a bond that's maturity equals the holding period
Together
interest rate
Velocity
42. Relationship among yields of different maturities of hte same type of security.
Discount (zero coupon) Bond
Term Structure
Ex Post
Humped Yield Curves
43. 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.
bond
Store of Value
Price-level effect
who determines our money supply
44. The degree of uncertainty associated with the return on one asset relative to alternative assets.
Upward
Risk
hyperinflation
Fixed Payment-Loan
45. 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
Evolution of the Payment System
Kind of risk for a bond that's maturity equals the holding period
Supply and Demand for Bonds
46. Praises rising at a fast and furious pace
Present Discount Value
Money (money supply)
hyperinflation
Downward Slopes
47. Alters publics liquidity and influences spending through portfolio adjustment
Downward
Forms of Commercial Papers
increases in money supply causes
Expected Return
48. Determines interest rates
bond market (money markets)
Commodity Money
Long-run Movements
recession
49. Paper currency - has no real value
Real world obervations
Income
The Liquidity Premium Modification
Fiat Money
50. Bought at price below face value and face value repaid at maturity
Store of Value
Coupon Bond
Discount (zero coupon) Bond
Federal Funds Market