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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 for one- ten years.
inflation
Long-run Movements
Flat yield curves
T-Notes
2. Periods of declining aggregate output - unemployment high - investment is low.
recession
Unit of Account
T-Bonds
Tnotes
3. Used to save purchasing power; most liquid of all assets but loses value during inflation
Real Interest Rate
M1
Store of Value
Term structure theory
4. Short-Term Debt Instruments
interest rate
Money Market
Price vs Yields to Maturity
Evolution of the Payment System
5. Greater incentive to borrow and less to lend.
When real rate is low
inflation
Banker's Acceptance
Long-Term Maturities (Bond Market)
6. Excess liquidity is spent on goods and services
direct impact
Slope upward
Wealth
Income effect
7. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
common stock
Fisher Effect
business cycle
Supply and Demand for Bonds
8. 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.
direct impact
Federal Funds Market
Eurocurrency
Price-level effect
9. More than 10 year maturities
Commodity Money
When real rate is low
Ex Post
Long-Term Maturities (Bond Market)
10. 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.
OTC
Repo
Downward Slopes
Risk
11. 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)
When real rate is high
Keynesian Model
The Expectation Approach
Regulations increase information available to investors which does what?
12. 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.
Foreign Bonds
OTC
Short-Term Maturity
Velocity
13. If short-term interest rates are low than the yield curve slopes...
How Financial Markets directly improve the well-being of consumers
business cycle
Upward
Repo
14. One to Ten year maturities which fund long-term capital investments
Income
Yield to Maturity for simple loans
Intermediate-term Maturity (Capital Market)
Supply and Demand for Bonds
15. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits
M1
monetary policy
Upward Slops
increases in money supply causes
16. The percent of available labor force unemployed
Upward Slops
unemployment rate
Not constant
Yield on a Discount Basis
17. Praises rising at a fast and furious pace
hyperinflation
Real world obervations
Fisher Effect
Upward Slops
18. Allowing consumers to time their purchases better.
How Financial Markets directly improve the well-being of consumers
Wealth
Function of Financial Intermediaries
Yield to Maturity for simple loans
19. Used to measure value in the economy
Long-Term Maturities (Bond Market)
Unit of Account
Upward
financial markets/institutions
20. What will investors expect for taking on higher default risk?
common stock
Higher Returns
Real Interest Rate
central bank
21. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
T-Bills
direct impact
Fixed Payment-Loan
function of financial markets
22. Lower excess supply and lower price will fall and interest rates will rise
Why returns are more volatile for Long-Term bonds
Certificate of Deposit
Bd < Bs
Interest rate
23. 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.
Term Structure
Unit of Account
The Expectation Approach
who determines our money supply
24. Lower the equilibrium price and interest rate.
Price-level effect
Wealth
Long-Term Maturities (Bond Market)
Bd = Bs
25. How interest rates on bonds of different maturities move over time
business cycle
Together
Medium of Exchange
T-Bonds
26. Interest rate that equates today's value with present value of all future payments.
Downward
foreign exchange market
The Expectation Approach
Yield to Maturity for simple loans
27. Producing an efficient allocation of capital - which increases production
Ex Post
How Financial Markets promote economic efficiency
bond market (money markets)
Interest rate
28. Yield to maturity; a measure of an interternporal price
Interest rate
Eurocurrency
Unit of Account
How do regulations ensure the soundness of Financial Intermediaries?
29. Financial instruments whose return is based on the underlying returns on mortgage loans.
Mortgage-Backed Securities
inflation
T-Bills
bond market (money markets)
30. Reduces adverse selection - moral hazard - and insider trading.
Regulations increase information available to investors which does what?
Ex Post
Present Discount Value
function of financial markets
31. For a commodity to function efficiently as money it must be...
increases in money supply causes
easily standardized - widely accepted - divisible and not deteriorate quickly
Forms of Commercial Papers
Money (money supply)
32. Most Common
Upward Slops
Tnotes
common stock
Eurocurrency
33. Pays owner of bond a fixed payment - until maturity when it pays off face par value
When real rate is low
Yield to Maturity for simple loans
Ex Ante
Coupon Bond
34. Determines interest rates
T-Bonds
Expected Return
Banker's Acceptance
bond market (money markets)
35. Many lead to more employment and output
increases in money supply causes
Velocity
Bd > Bs
increasing money supply
36. The return expected over the next period on one asset relative to the alternative asset.
Expected Return
Interest rate
Present Discount Value
Term Structure
37. Paper currency - has no real value
T-Notes
Ex Ante
Fiat Money
central bank
38. 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.
T-Bills
financial markets/institutions
OTC
Eurocurrency Market
39. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Hs a greater upward shift
M1
Medium of Exchange
Ex Post
40. Relationship among yields of different maturities of hte same type of security.
Foreign Bonds
Higher Returns
Term Structure
Velocity
41. 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
Repo
bond market (money markets)
Wealth
42. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Term Structure
Federal Funds Market
interest rate
Ex Ante
43. Influence on business cycle - inflation - interest rates
How Financial Markets directly improve the well-being of consumers
Downward Slopes
monetary policy
Wealth
44. 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.
financial markets
financial markets/institutions
Price vs Yields to Maturity
Yield Curve
45. Foreign currencies deposited in banks outside the home country.
Eurocurrency
Interest rate
easily standardized - widely accepted - divisible and not deteriorate quickly
Downward
46. Yield curves most always...
How Financial Markets directly improve the well-being of consumers
business cycle
Slope upward
Ex Ante
47. A dollar paid to you one year from now is less valueable than a dollar paid to you today
Yield to Maturity for simple loans
federal funds rate
Present Discount Value
Tbonds
48. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
T-Bills
Unit of Account
Money (money supply)
Keynesian Model
49. 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.
common stock
Money Market
The Liquidity Premium Modification
Yield Curve
50. What kind of movements should we pay attention to in money supply numbers?
Long-run Movements
Together
banks and money supply
Yield to Maturity for simple loans
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