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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. For a commodity to function efficiently as money it must be...
easily standardized - widely accepted - divisible and not deteriorate quickly
function of financial markets
Price-level effect
Upward
2. Short-Term Debt Instruments
Certificate of Deposit
federal funds rate
Present Discount Value
Money Market
3. Bond denominated in a currency other than that of the country in which it is sold.
Short-Term Maturity
Eurobond
Interest rate
Ex Post
4. The higher the default risk means the yield curve...
Hs a greater upward shift
unemployment rate
Repo
Function of Financial Intermediaries
5. 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.
hyperinflation
T-Bills
Upward
Intermediate-term Maturity (Capital Market)
6. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
T-Bonds
Fiat Money
Certificate of Deposit
Bd > Bs
7. Lower excess supply and lower price will fall and interest rates will rise
Velocity
Humped Yield Curves
Bd < Bs
When real rate is high
8. Long-Term Debt and Equity Instruments
Capital Markets
Discount (zero coupon) Bond
Eurobond
Intermediate-term Maturity (Capital Market)
9. Lower transaction costs - reduce risk - asymmetric information.
bond
Price vs Yields to Maturity
Function of Financial Intermediaries
common stock
10. How interest rates on bonds of different maturities move over time
Fisher Effect
federal funds rate
T-Bills
Together
11. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
Corporate Bond Default risk
Fisher Effect
Simple Loan
Real Interest Rate
12. Flow of earnings per unit of time
unemployment rate
Income
Simple Loan
Real world obervations
13. 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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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.
Together
T-Bills
financial markets/institutions
Price-level effect
15. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
Evolution of the Payment System
OTC
who determines our money supply
Tnotes
16. 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.
Supply and Demand for Bonds
Risk
Why Revisions are issued to money data
Fixed Payment-Loan
17. Lower excess demand and lower price will rise and interest rates will fall
Bd > Bs
Unit of Account
Forms of Commercial Papers
Wealth
18. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
Expected Return
Certificate of Deposit
Discount (zero coupon) Bond
Fisher Effect
19. Real interest rate: the real interest rate actually realized.
Bd < Bs
role of money
Interest rate
Ex Post
20. One to Ten year maturities which fund long-term capital investments
The Preferred Habitat Approach
Hs a greater upward shift
Ex Post
Intermediate-term Maturity (Capital Market)
21. Less than one year and service current liquidity needs
Regulations increase information available to investors which does what?
Short-Term Maturity
role of money
tax structure
22. The upward and downward movement of aggregate output produced in the economy.
Real Interest Rate
Bd > Bs
monetary policy
business cycle
23. 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.
Income effect
Unit of Account
M1
role of money
24. What kind of movements should we pay attention to in money supply numbers?
Banker's Acceptance
OTC
The Preferred Habitat Approach
Long-run Movements
25. Rare
Simple Loan
Downward Slopes
Yield to Maturity for simple loans
Expected Return
26. Principal plus interest paid to lender at given maturity date
The Preferred Habitat Approach
Long-run Movements
Hs a greater upward shift
Simple Loan
27. Paper currency - has no real value
Fiat Money
direct impact
The Expectation Approach
Hs a greater upward shift
28. The central bank
Eurobond
who determines our money supply
Repo
Regulations increase information available to investors which does what?
29. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
Together
T-Bonds
T-Bills
Bd < Bs
30. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
Federal Funds Market
indirect impact
recession
Certificate of Deposit
31. More than 10 year maturities
Real world obervations
Long-Term Maturities (Bond Market)
Why Revisions are issued to money data
How Financial Markets promote economic efficiency
32. Yields similar for all maturities
Yield on a Discount Basis
Corporate Bond Default risk
How Financial Markets directly improve the well-being of consumers
Flat yield curves
33. 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
Commodity Money
Real world obervations
banks and money supply
Medium of Exchange
34. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Humped Yield Curves
Short-Term Maturity
Ex Ante
bond
35. The relationship between yield and maturity is...
Fixed Payment-Loan
central bank
Not constant
direct impact
36. Financial instruments whose return is based on the underlying returns on mortgage loans.
Price-level effect
Kind of risk for a bond that's maturity equals the holding period
Mortgage-Backed Securities
OTC
37. Excess liquidity is spent on goods and services
direct impact
Yield on a Discount Basis
Price vs Yields to Maturity
Forms of Commercial Papers
38. Used to measure value in the economy
Unit of Account
Evolution of the Payment System
Bd > Bs
Hs a greater upward shift
39. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
T-Bills
role of money
bond
Certificate of Deposit
40. Take the form of promissory notes - drafts - checks - and CDs
Price-level effect
Velocity
Discount (zero coupon) Bond
Forms of Commercial Papers
41. 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
Commodity Money
monetary policy
Store of Value
The Preferred Habitat Approach
42. 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.
Evolution of the Payment System
Federal Funds Market
Kind of risk for a bond that's maturity equals the holding period
foreign exchange market
43. Small depository institutions report infrequently and adjustments must be made for seasonal variations
Why Revisions are issued to money data
Eurobond
Repo
Commodity Money
44. Producing an efficient allocation of capital - which increases production
direct impact
Flat yield curves
T-Bonds
How Financial Markets promote economic efficiency
45. No interest- rate risk
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46. If the short-term interest rates are high than the yield curve slopes?
Function of Financial Intermediaries
Downward
Capital Markets
Federal Funds Market
47. 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.
easily standardized - widely accepted - divisible and not deteriorate quickly
federal funds rate
The Expectation Approach
Intermediate-term Maturity (Capital Market)
48. 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.
easily standardized - widely accepted - divisible and not deteriorate quickly
Eurocurrency Market
Hs a greater upward shift
Price vs Yields to Maturity
49. 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.
who determines our money supply
foreign exchange market
increasing money supply
Price-level effect
50. Instrumental in moving funds between countries
Repo
foreign exchange market
Yield on a Discount Basis
Present Discount Value