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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. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
T-Bonds
Price-level effect
The Liquidity Premium Modification
monetary policy
2. 30 year maturities but not since 2001
common stock
Why returns are more volatile for Long-Term bonds
Tbonds
role of money
3. Yield to maturity; a measure of an interternporal price
Supply and Demand for Bonds
Upward
role of money
Interest rate
4. Nominal interest rate is not adjusted for inflation.
M1
Yield Curve
Interest rate
Capital Markets
5. 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.
Corporate Bonds
function of financial markets
Price vs Yields to Maturity
Coupon Bond
6. Yield curves most always...
Slope upward
interest rate
Long-Term Maturities (Bond Market)
M1
7. Alters publics liquidity and influences spending through portfolio adjustment
increases in money supply causes
easily standardized - widely accepted - divisible and not deteriorate quickly
Regulations increase information available to investors which does what?
Downward Slopes
8. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
When real rate is high
How do regulations ensure the soundness of Financial Intermediaries?
Coupon Bond
Eurocurrency Market
9. Bond denominated in a currency other than that of the country in which it is sold.
How do regulations ensure the soundness of Financial Intermediaries?
Eurobond
Coupon Bond
indirect impact
10. Influence on business cycle - inflation - interest rates
banks and money supply
Wealth
monetary policy
The Preferred Habitat Approach
11. Long-Term Debt and Equity Instruments
Money Market
Long-run Movements
Capital Markets
T-Bonds
12. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
Price-level effect
Yield Curve
Downward
Use present value calculations
13. Allowing consumers to time their purchases better.
How Financial Markets directly improve the well-being of consumers
Real world obervations
foreign exchange market
common stock
14. The return expected over the next period on one asset relative to the alternative asset.
central bank
business cycle
Real world obervations
Expected Return
15. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
federal funds rate
Bd = Bs
Repo
business cycle
16. Instrumental in moving funds between countries
Price vs Yields to Maturity
inflation
foreign exchange market
Real world obervations
17. Flow of earnings per unit of time
Long-Term Maturities (Bond Market)
Regulations increase information available to investors which does what?
Income
Fixed Payment-Loan
18. 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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19. Lower excess demand and lower price will rise and interest rates will fall
Discount (zero coupon) Bond
Price-level effect
business cycle
Bd > Bs
20. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Term Structure
T-Bills
OTC
Eurocurrency Market
21. How interest rates on bonds of different maturities move over time
When real rate is low
Money (money supply)
Store of Value
Together
22. Periods of declining aggregate output - unemployment high - investment is low.
Price-level effect
Why Revisions are issued to money data
Term structure theory
recession
23. Paper currency - has no real value
Regulations increase information available to investors which does what?
Fiat Money
Capital Markets
Banker's Acceptance
24. 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-Bonds
Corporate Bond Default risk
T-Bills
central bank
25. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.
Yield on a Discount Basis
increasing money supply
Together
Kind of risk for a bond that's maturity equals the holding period
26. Reduces adverse selection - moral hazard - and insider trading.
Regulations increase information available to investors which does what?
recession
Why Revisions are issued to money data
inflation
27. Most Common
recession
Money Market
indirect impact
Upward Slops
28. 2 -5 -10 year maturities
Present Discount Value
Evolution of the Payment System
who determines our money supply
Tnotes
29. One to Ten year maturities which fund long-term capital investments
Yield Curve
central bank
Intermediate-term Maturity (Capital Market)
Keynesian Model
30. Producing an efficient allocation of capital - which increases production
Unit of Account
Flat yield curves
Velocity
How Financial Markets promote economic efficiency
31. Held for one- ten years.
Interest rate
T-Notes
Higher Returns
Money Market
32. The central bank
Mortgage-Backed Securities
Interest rate
who determines our money supply
interest rate
33. They channel funds from savers to investors - thereby promoting economic efficiency
Tbonds
financial markets
Why Revisions are issued to money data
Money (money supply)
34. Principal plus interest paid to lender at given maturity date
Simple Loan
Capital Markets
Yield Curve
Short-Term Maturity
35. 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.
Medium of Exchange
Fisher Effect
Repo
Keynesian Model
36. Real interest rate: the real interest rate actually realized.
financial markets/institutions
Present Discount Value
When real rate is low
Ex Post
37. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
indirect impact
interest rate
Velocity
Why returns are more volatile for Long-Term bonds
38. What kind of movements should we pay attention to in money supply numbers?
T-Notes
Repo
financial markets
Long-run Movements
39. 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
federal funds rate
Real world obervations
OTC
direct impact
40. 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.
Upward Slops
The Liquidity Premium Modification
Term structure theory
increasing money supply
41. The upward and downward movement of aggregate output produced in the economy.
Ex Ante
Bd < Bs
banks and money supply
business cycle
42. 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.
Slope upward
Downward Slopes
Supply and Demand for Bonds
federal funds rate
43. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Interest rate
Yield to Maturity for simple loans
Price vs Yields to Maturity
Fixed Payment-Loan
44. A debt security that promises to make payments periodically for a specified period of time.
Supply and Demand for Bonds
common stock
Eurocurrency Market
bond
45. Investors are concerned about the after tax return on bonds
Hs a greater upward shift
tax structure
bond
Risk
46. Financial instruments whose return is based on the underlying returns on mortgage loans.
Store of Value
Slope upward
Mortgage-Backed Securities
Federal Funds Market
47. Used to save purchasing power; most liquid of all assets but loses value during inflation
Store of Value
Not constant
Together
Real world obervations
48. Intermediate Yields are highest
Humped Yield Curves
Short-Term Maturity
Discount (zero coupon) Bond
Kind of risk for a bond that's maturity equals the holding period
49. 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
federal funds rate
Present Discount Value
Money (money supply)
50. It will shift it to the right.
Velocity
Slope upward
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Fixed Payment-Loan