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 higher the default risk means the yield curve...






2. Yields similar for all maturities






3. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money






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






5. 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






6. 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.






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






8. 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.






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






10. 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.






11. Greater incentive to borrow and less to lend.






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






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






14. Producing an efficient allocation of capital - which increases production






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






16. Cost of borrowing money - expressed as a percentage of the amount borrowed per year.






17. Medium of exchange; unit of account; store of value; increases the liquidity in the economy






18. One to Ten year maturities which fund long-term capital investments






19. Paper currency - has no real value






20. 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






21. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending






22. Used to measure value in the economy






23. Investors are concerned about the after tax return on bonds






24. Alters publics liquidity and influences spending through portfolio adjustment






25. A dollar paid to you one year from now is less valueable than a dollar paid to you today






26. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period






27. The relationship between yield and maturity is...






28. Allowing consumers to time their purchases better.






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






30. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.






31. The increase in the price of set goods and services in a given economy over a period of time - the percent change.






32. Instrumental in moving funds between countries






33. They channel funds from savers to investors - thereby promoting economic efficiency






34. Foreign currencies deposited in banks outside the home country.






35. Influence on business cycle - inflation - interest rates






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






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






38. 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.






39. A share of ownership in a corporation






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






41. If short-term interest rates are low than the yield curve slopes...






42. Reduces adverse selection - moral hazard - and insider trading.






43. It will shift it to the right.






44. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.






45. The central bank






46. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits






47. Lower the equilibrium price and interest rate.






48. Long-Term Debt and Equity Instruments






49. 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.






50. The percent of available labor force unemployed