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. 30 year maturities but not since 2001






2. Sold in a foreign country and denominated in that country's currency.






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






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






5. Many lead to more employment and output






6. 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.






7. 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.






8. Nominal interest rate is not adjusted for inflation.






9. 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






10. Rare






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






12. Short-Term Debt Instruments






13. Lower transaction costs - reduce risk - asymmetric information.






14. Precious Metals or another valueable commodity






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






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






17. Higher default risk compared to municipal Bonds






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






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






20. Less than one year and service current liquidity needs






21. It determines the equilibrium interest rate in terms of the supply of land demanded for money . People store their wealth in money and bonds. If the market for money is in equilibrium (Ms=Md) then the bond markets are also in equilibrium (Bs=Bd)






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






23. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One






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






25. 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.






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






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






28. Relationship among yields of different maturities of hte same type of security.






29. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept






30. 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.






31. 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.






32. More than 10 year maturities






33. Used to measure value in the economy






34. 2 -5 -10 year maturities






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






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






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






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






39. Bought at price below face value and face value repaid at maturity






40. Greater incentive to borrow and less to lend.






41. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.






42. What will investors expect for taking on higher default risk?






43. 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.






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






45. 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.






46. 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.






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






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






49. They have a higher interest-rate risk.






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