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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. The total collection of pieces of property that serve to store value
Wealth
The Preferred Habitat Approach
Regulations increase information available to investors which does what?
central bank
2. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
banks and money supply
Eurocurrency
Interest rate
T-Bills
3. Allowing consumers to time their purchases better.
common stock
recession
Flat yield curves
How Financial Markets directly improve the well-being of consumers
4. The upward and downward movement of aggregate output produced in the economy.
Keynesian Model
business cycle
Fiat Money
Money Market
5. Principal plus interest paid to lender at given maturity date
Certificate of Deposit
Income
Simple Loan
easily standardized - widely accepted - divisible and not deteriorate quickly
6. 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.
The Liquidity Premium Modification
Risk
Present Discount Value
Keynesian Model
7. Influence on business cycle - inflation - interest rates
Simple Loan
Short-Term Maturity
monetary policy
The Liquidity Premium Modification
8. Financial instruments whose return is based on the underlying returns on mortgage loans.
M1
Term structure theory
The Expectation Approach
Mortgage-Backed Securities
9. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
Upward Slops
easily standardized - widely accepted - divisible and not deteriorate quickly
Intermediate-term Maturity (Capital Market)
T-Bonds
10. Pays owner of bond a fixed payment - until maturity when it pays off face par value
direct impact
Hs a greater upward shift
interest rate
Coupon Bond
11. Instrumental in moving funds between countries
who determines our money supply
foreign exchange market
role of money
Store of Value
12. Held for one- ten years.
How Financial Markets promote economic efficiency
T-Notes
Interest rate
increasing money supply
13. Investors are concerned about the after tax return on bonds
Certificate of Deposit
OTC
tax structure
Evolution of the Payment System
14. Lower the equilibrium price and interest rate.
OTC
Fisher Effect
Eurocurrency
Bd = Bs
15. Paper currency - has no real value
Fiat Money
Higher Returns
Hs a greater upward shift
Money (money supply)
16. Interest rate that equates today's value with present value of all future payments.
Regulations increase information available to investors which does what?
role of money
Yield to Maturity for simple loans
Ex Post
17. Comparing payoffs at different points in time
easily standardized - widely accepted - divisible and not deteriorate quickly
Supply and Demand for Bonds
Use present value calculations
Forms of Commercial Papers
18. Less than one year and service current liquidity needs
Short-Term Maturity
Simple Loan
Together
monetary policy
19. What will investors expect for taking on higher default risk?
Together
Humped Yield Curves
Yield Curve
Higher Returns
20. Crucial role in creation of money
Tnotes
Intermediate-term Maturity (Capital Market)
Term Structure
banks and money supply
21. Reduces adverse selection - moral hazard - and insider trading.
Regulations increase information available to investors which does what?
Expected Return
Long-run Movements
financial markets
22. For a commodity to function efficiently as money it must be...
Keynesian Model
easily standardized - widely accepted - divisible and not deteriorate quickly
Price-level effect
Mortgage-Backed Securities
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.
Medium of Exchange
Forms of Commercial Papers
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Income effect
24. Praises rising at a fast and furious pace
increases in money supply causes
Term Structure
hyperinflation
T-Bills
25. 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
26. 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
Term structure theory
Unit of Account
Price-level effect
bond
27. A debt security that promises to make payments periodically for a specified period of time.
Present Discount Value
Higher Returns
central bank
bond
28. They channel funds from savers to investors - thereby promoting economic efficiency
inflation
financial markets
Certificate of Deposit
Income effect
29. Real interest rate: the real interest rate actually realized.
monetary policy
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Upward
Ex Post
30. Excess liquidity is spent on goods and services
foreign exchange market
unemployment rate
direct impact
Upward
31. Lower Incentive to borrow but a greater incentive to lend.
Simple Loan
When real rate is high
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Downward
32. The return expected over the next period on one asset relative to the alternative asset.
inflation
Simple Loan
Expected Return
Regulations increase information available to investors which does what?
33. Intermediate Yields are highest
central bank
T-Bonds
direct impact
Humped Yield Curves
34. Producing an efficient allocation of capital - which increases production
How Financial Markets promote economic efficiency
Downward
Bd < Bs
T-Bills
35. Sold in a foreign country and denominated in that country's currency.
Capital Markets
Evolution of the Payment System
Foreign Bonds
M1
36. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Keynesian Model
Ex Ante
Tbonds
Slope upward
37. Periods of declining aggregate output - unemployment high - investment is low.
Interest rate
Hs a greater upward shift
recession
The Preferred Habitat Approach
38. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Long-Term Maturities (Bond Market)
Simple Loan
Regulations increase information available to investors which does what?
Eurocurrency Market
39. The percent of available labor force unemployed
Certificate of Deposit
Short-Term Maturity
increasing money supply
unemployment rate
40. The relationship between yield and maturity is...
Kind of risk for a bond that's maturity equals the holding period
Not constant
financial markets
Bd < Bs
41. More than 10 year maturities
Long-run Movements
central bank
Long-Term Maturities (Bond Market)
Yield Curve
42. Lower transaction costs - reduce risk - asymmetric information.
Income
Function of Financial Intermediaries
Kind of risk for a bond that's maturity equals the holding period
Federal Funds Market
43. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
Bd = Bs
function of financial markets
Eurobond
Upward
44. It will shift it to the right.
Unit of Account
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Expected Return
Not constant
45. Lower excess supply and lower price will fall and interest rates will rise
How Financial Markets directly improve the well-being of consumers
Not constant
Bd < Bs
Medium of Exchange
46. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
The Preferred Habitat Approach
Evolution of the Payment System
Price-level effect
Mortgage-Backed Securities
47. How interest rates on bonds of different maturities move over time
M1
federal funds rate
Hs a greater upward shift
Together
48. Higher default risk compared to municipal Bonds
Corporate Bond Default risk
The Preferred Habitat Approach
bond market (money markets)
Corporate Bonds
49. Take the form of promissory notes - drafts - checks - and CDs
Forms of Commercial Papers
Together
Money (money supply)
Ex Post
50. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
Foreign Bonds
indirect impact
Use present value calculations
Corporate Bonds