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Can you answer 50 questions in 15 minutes?







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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. Producing an efficient allocation of capital - which increases production






2. How interest rates on bonds of different maturities move over time






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






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






5. More than 10 year maturities






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






7. Many lead to more employment and output






8. Take the form of promissory notes - drafts - checks - and CDs






9. 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.






10. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






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






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






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






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






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






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






17. 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.






18. 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.






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






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






21. 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.






22. No interest- rate risk

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23. 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.






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






25. 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)






26. 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.






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






28. 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.






29. Comparing payoffs at different points in time






30. 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.






31. Lower excess supply and lower price will fall and interest rates will rise






32. 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






33. Expectations theory forms the foundation of the slope of the curve. Liquidity Premium Theory makes Long Term permanent modifications that suggests an up ward slopping curve. Over short periods - relatives supplies of securities have an impact on yiel






34. Held for one- ten years.






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






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






37. Precious Metals or another valueable commodity






38. Greater incentive to borrow and less to lend.






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






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






41. Flow of earnings per unit of time






42. Most Common






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






44. 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.






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






46. 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






47. Instrumental in moving funds between countries






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






49. Lower excess demand and lower price will rise and interest rates will fall






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