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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 return expected over the next period on one asset relative to the alternative asset.
Price vs Yields to Maturity
Regulations increase information available to investors which does what?
Expected Return
Present Discount Value
2. It will shift it to the right.
Yield to Maturity for simple loans
Long-run Movements
monetary policy
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
3. For a commodity to function efficiently as money it must be...
easily standardized - widely accepted - divisible and not deteriorate quickly
T-Bonds
financial markets/institutions
increases in money supply causes
4. Lower excess demand and lower price will rise and interest rates will fall
Bd > Bs
financial markets
Wealth
Real world obervations
5. Relationship among yields of different maturities of hte same type of security.
indirect impact
Supply and Demand for Bonds
Expected Return
Term Structure
6. The central bank
Price-level effect
Humped Yield Curves
banks and money supply
who determines our money supply
7. Influence on business cycle - inflation - interest rates
Fiat Money
Foreign Bonds
monetary policy
Term Structure
8. If the short-term interest rates are high than the yield curve slopes?
Corporate Bond Default risk
Upward
Downward
Interest rate
9. 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.
Function of Financial Intermediaries
Bd < Bs
Corporate Bonds
How Financial Markets directly improve the well-being of consumers
10. Principal plus interest paid to lender at given maturity date
tax structure
Hs a greater upward shift
Together
Simple Loan
11. Held for one- ten years.
Present Discount Value
T-Notes
Long-run Movements
T-Bills
12. Bought at price below face value and face value repaid at maturity
Forms of Commercial Papers
Upward
Yield to Maturity for simple loans
Discount (zero coupon) Bond
13. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
Eurobond
Upward
function of financial markets
role of money
14. If short-term interest rates are low than the yield curve slopes...
Medium of Exchange
Function of Financial Intermediaries
increases in money supply causes
Upward
15. Sold in a foreign country and denominated in that country's currency.
Foreign Bonds
Bd = Bs
Bd < Bs
easily standardized - widely accepted - divisible and not deteriorate quickly
16. Bond denominated in a currency other than that of the country in which it is sold.
Supply and Demand for Bonds
Eurobond
Long-run Movements
Wealth
17. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
Yield Curve
unemployment rate
Tnotes
Capital Markets
18. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Interest rate
unemployment rate
Price vs Yields to Maturity
Medium of Exchange
19. Intermediate Yields are highest
Regulations increase information available to investors which does what?
Humped Yield Curves
Repo
Downward
20. Lower the equilibrium price and interest rate.
Fiat Money
increasing money supply
Bd = Bs
Together
21. Long-Term Debt and Equity Instruments
Not constant
Price vs Yields to Maturity
bond
Capital Markets
22. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
Real Interest Rate
T-Bonds
Yield on a Discount Basis
Risk
23. What will investors expect for taking on higher default risk?
How Financial Markets promote economic efficiency
financial markets/institutions
Higher Returns
federal funds rate
24. No interest- rate risk
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25. The higher the default risk means the yield curve...
Medium of Exchange
Hs a greater upward shift
Why returns are more volatile for Long-Term bonds
Upward Slops
26. Producing an efficient allocation of capital - which increases production
monetary policy
Unit of Account
How Financial Markets promote economic efficiency
The Liquidity Premium Modification
27. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Wealth
Eurocurrency Market
Present Discount Value
Bd < Bs
28. 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.
Fiat Money
Eurocurrency
M1
central bank
29. Flow of earnings per unit of time
Corporate Bonds
Income
Risk
Unit of Account
30. Less than one year and service current liquidity needs
Store of Value
Short-Term Maturity
Supply and Demand for Bonds
function of financial markets
31. Short-Term Debt Instruments
Keynesian Model
Money Market
Discount (zero coupon) Bond
Present Discount Value
32. A share of ownership in a corporation
common stock
Discount (zero coupon) Bond
Corporate Bonds
hyperinflation
33. 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
Medium of Exchange
Tbonds
inflation
34. Reduces adverse selection - moral hazard - and insider trading.
Regulations increase information available to investors which does what?
bond market (money markets)
financial markets/institutions
financial markets
35. Foreign currencies deposited in banks outside the home country.
Tbonds
Eurocurrency
Long-run Movements
increases in money supply causes
36. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
Use present value calculations
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Price-level effect
Evolution of the Payment System
37. They channel funds from savers to investors - thereby promoting economic efficiency
business cycle
Kind of risk for a bond that's maturity equals the holding period
Upward Slops
financial markets
38. The total collection of pieces of property that serve to store value
T-Bills
T-Notes
Expected Return
Wealth
39. Yield to maturity; a measure of an interternporal price
Interest rate
increasing money supply
Expected Return
Ex Ante
40. Interest rate that equates today's value with present value of all future payments.
indirect impact
Yield to Maturity for simple loans
unemployment rate
Bd = Bs
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
Intermediate-term Maturity (Capital Market)
banks and money supply
The Preferred Habitat Approach
Simple Loan
42. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
How do regulations ensure the soundness of Financial Intermediaries?
Ex Ante
hyperinflation
Bd > Bs
43. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
How do regulations ensure the soundness of Financial Intermediaries?
Ex Ante
Fixed Payment-Loan
Function of Financial Intermediaries
44. 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.
business cycle
Tbonds
Wealth
financial markets/institutions
45. Higher default risk compared to municipal Bonds
central bank
Ex Ante
Corporate Bond Default risk
Present Discount Value
46. Many lead to more employment and output
increasing money supply
Money Market
federal funds rate
Keynesian Model
47. 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
Use present value calculations
Ex Post
Price-level effect
48. What kind of movements should we pay attention to in money supply numbers?
Long-run Movements
T-Bills
function of financial markets
Eurocurrency
49. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
Ex Ante
indirect impact
Corporate Bonds
federal funds rate
50. Take the form of promissory notes - drafts - checks - and CDs
Forms of Commercial Papers
Yield on a Discount Basis
Discount (zero coupon) Bond
increasing money supply