Test your basic knowledge |

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






2. 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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3. Investors are concerned about the after tax return on bonds






4. The interest rate at which private depository institutions lend balances to other depository institutions usually over night






5. Excess liquidity is spent on goods and services






6. Held for one- ten years.






7. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.






8. Yield curves most always...






9. Yield to maturity; a measure of an interternporal price






10. Yields similar for all maturities






11. Small depository institutions report infrequently and adjustments must be made for seasonal variations






12. 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.






13. A share of ownership in a corporation






14. Long-Term Debt and Equity Instruments






15. What kind of movements should we pay attention to in money supply numbers?






16. 2 -5 -10 year maturities






17. Interest rate that equates today's value with present value of all future payments.






18. Alters publics liquidity and influences spending through portfolio adjustment






19. The percent of available labor force unemployed






20. Financial instruments whose return is based on the underlying returns on mortgage loans.






21. The central bank






22. Lower Incentive to borrow but a greater incentive to lend.






23. The higher the default risk means the yield curve...






24. 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.






25. 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.






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






27. 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.






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






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






30. It will shift it to the right.






31. 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.






32. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time






33. Short-Term Debt Instruments






34. Principal plus interest paid to lender at given maturity date






35. 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.






36. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






37. 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.






38. Held ten years or more. They pay semiannual dividends and return of principal at maturity.






39. Precious Metals or another valueable commodity






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






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






42. For a commodity to function efficiently as money it must be...






43. Instrumental in moving funds between countries






44. The upward and downward movement of aggregate output produced in the economy.






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






46. They have a higher interest-rate risk.






47. 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.






48. 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.






49. 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






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