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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. Yields similar for all maturities
Unit of Account
Flat yield curves
indirect impact
bond
2. Seller will buy back the asset at a later date and typically at a higher price. These securities are usually government securities and are used by banks and Large Corporations.
Velocity
Term structure theory
When real rate is high
Repo
3. 2 -5 -10 year maturities
Tnotes
Corporate Bonds
Regulations increase information available to investors which does what?
Why returns are more volatile for Long-Term bonds
4. Greater incentive to borrow and less to lend.
When real rate is low
increases in money supply causes
role of money
Bd = Bs
5. They channel funds from savers to investors - thereby promoting economic efficiency
Yield on a Discount Basis
financial markets
financial markets/institutions
Certificate of Deposit
6. Lower the equilibrium price and interest rate.
Money (money supply)
Money Market
Bd = Bs
who determines our money supply
7. 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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8. More than 10 year maturities
Present Discount Value
Long-Term Maturities (Bond Market)
Together
Slope upward
9. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
Income effect
Ex Post
role of money
When real rate is high
10. Higher default risk compared to municipal Bonds
Corporate Bond Default risk
Mortgage-Backed Securities
Higher Returns
Eurocurrency Market
11. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
Discount (zero coupon) Bond
T-Bills
How do regulations ensure the soundness of Financial Intermediaries?
Tnotes
12. The degree of uncertainty associated with the return on one asset relative to alternative assets.
Risk
Interest rate
Ex Post
Banker's Acceptance
13. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period
Upward Slops
Term Structure
Real world obervations
Velocity
14. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
Supply and Demand for Bonds
Real Interest Rate
M1
Federal Funds Market
15. Allowing consumers to time their purchases better.
The Liquidity Premium Modification
increases in money supply causes
How Financial Markets directly improve the well-being of consumers
T-Notes
16. Short-Term Debt Instruments
Money Market
Banker's Acceptance
OTC
Kind of risk for a bond that's maturity equals the holding period
17. Lower transaction costs - reduce risk - asymmetric information.
banks and money supply
indirect impact
Function of Financial Intermediaries
Federal Funds Market
18. Producing an efficient allocation of capital - which increases production
federal funds rate
How Financial Markets promote economic efficiency
Corporate Bond Default risk
Slope upward
19. 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.
Store of Value
Corporate Bond Default risk
Upward
OTC
20. One to Ten year maturities which fund long-term capital investments
Intermediate-term Maturity (Capital Market)
common stock
How do regulations ensure the soundness of Financial Intermediaries?
hyperinflation
21. 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.
Eurocurrency
inflation
Simple Loan
Price-level effect
22. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
function of financial markets
Coupon Bond
federal funds rate
Capital Markets
23. Investors are concerned about the after tax return on bonds
Short-Term Maturity
Mortgage-Backed Securities
business cycle
tax structure
24. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
The Liquidity Premium Modification
Why returns are more volatile for Long-Term bonds
Tbonds
How do regulations ensure the soundness of Financial Intermediaries?
25. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
foreign exchange market
Real world obervations
Money Market
Yield Curve
26. Excess liquidity is spent on goods and services
Banker's Acceptance
direct impact
Wealth
Yield to Maturity for simple loans
27. What kind of movements should we pay attention to in money supply numbers?
The Liquidity Premium Modification
Term Structure
Together
Long-run Movements
28. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
Banker's Acceptance
Wealth
federal funds rate
Keynesian Model
29. Influence on business cycle - inflation - interest rates
increasing money supply
Store of Value
Supply and Demand for Bonds
monetary policy
30. No interest- rate risk
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31. Relationship among yields of different maturities of hte same type of security.
Downward
business cycle
Function of Financial Intermediaries
Term Structure
32. Nominal interest rate is not adjusted for inflation.
Supply and Demand for Bonds
Interest rate
business cycle
Slope upward
33. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
OTC
Evolution of the Payment System
Price-level effect
Eurocurrency
34. Interest rate that equates today's value with present value of all future payments.
Store of Value
Yield to Maturity for simple loans
hyperinflation
bond
35. The central bank
Real world obervations
who determines our money supply
Medium of Exchange
Supply and Demand for Bonds
36. Lower excess demand and lower price will rise and interest rates will fall
Bd > Bs
Repo
Real world obervations
Commodity Money
37. If short-term interest rates are low than the yield curve slopes...
Upward
Regulations increase information available to investors which does what?
bond
Income
38. 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
Intermediate-term Maturity (Capital Market)
increases in money supply causes
hyperinflation
The Preferred Habitat Approach
39. Lower excess supply and lower price will fall and interest rates will rise
Store of Value
The Liquidity Premium Modification
Bd < Bs
Interest rate
40. The higher the default risk means the yield curve...
Hs a greater upward shift
Simple Loan
bond
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
41. Used to measure value in the economy
Unit of Account
Medium of Exchange
inflation
Humped Yield Curves
42. The total collection of pieces of property that serve to store value
Regulations increase information available to investors which does what?
Wealth
unemployment rate
Mortgage-Backed Securities
43. When bond is at par - the yield equals the coupon rate. The price and yield are negatively related. The yield greater than coupon rate when bond price is below par.
Yield on a Discount Basis
Price vs Yields to Maturity
central bank
role of money
44. For a commodity to function efficiently as money it must be...
easily standardized - widely accepted - divisible and not deteriorate quickly
financial markets
Real world obervations
Keynesian Model
45. If the short-term interest rates are high than the yield curve slopes?
Present Discount Value
inflation
Downward
Bd < Bs
46. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Eurocurrency Market
hyperinflation
T-Bills
financial markets/institutions
47. Long-Term Debt and Equity Instruments
When real rate is low
role of money
Capital Markets
T-Bills
48. Sold in a foreign country and denominated in that country's currency.
Foreign Bonds
bond market (money markets)
who determines our money supply
Tnotes
49. Lower Incentive to borrow but a greater incentive to lend.
Supply and Demand for Bonds
financial markets
How do regulations ensure the soundness of Financial Intermediaries?
When real rate is high
50. Comparing payoffs at different points in time
Use present value calculations
Velocity
The Preferred Habitat Approach
monetary policy
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