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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. Bond denominated in a currency other than that of the country in which it is sold.
The Expectation Approach
Eurobond
bond market (money markets)
Wealth
2. Paper currency - has no real value
Fiat Money
interest rate
Real Interest Rate
Not constant
3. 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.
federal funds rate
Why Revisions are issued to money data
Federal Funds Market
increasing money supply
4. 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.
Tnotes
Income effect
increases in money supply causes
financial markets
5. Flow of earnings per unit of time
Commodity Money
T-Bills
Income
Corporate Bond Default risk
6. Negotiable in secondary market and can also be resold in the secondary market. Minimum purchase of $100 -000 but the minimum in the secondary market is $2 -000 -000.
Fisher Effect
Unit of Account
Bd < Bs
Certificate of Deposit
7. Yield to maturity; a measure of an interternporal price
Long-run Movements
Interest rate
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Short-Term Maturity
8. Sold in a foreign country and denominated in that country's currency.
Function of Financial Intermediaries
The Preferred Habitat Approach
banks and money supply
Foreign Bonds
9. Small depository institutions report infrequently and adjustments must be made for seasonal variations
Function of Financial Intermediaries
Tnotes
Why Revisions are issued to money data
financial markets
10. Lower excess demand and lower price will rise and interest rates will fall
Money Market
Eurobond
monetary policy
Bd > Bs
11. 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.
Medium of Exchange
recession
Repo
bond
12. Higher default risk compared to municipal Bonds
Bd < Bs
Bd > Bs
Upward
Corporate Bond Default risk
13. Investors are concerned about the after tax return on bonds
OTC
T-Bonds
tax structure
Federal Funds Market
14. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.
Eurocurrency Market
financial markets/institutions
T-Bonds
Yield on a Discount Basis
15. Influence on business cycle - inflation - interest rates
When real rate is high
Real world obervations
monetary policy
interest rate
16. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
federal funds rate
Bd > Bs
central bank
function of financial markets
17. 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.
indirect impact
Fisher Effect
central bank
Downward
18. Crucial role in creation of money
banks and money supply
The Liquidity Premium Modification
Why Revisions are issued to money data
Bd = Bs
19. Allowing consumers to time their purchases better.
Certificate of Deposit
Regulations increase information available to investors which does what?
How Financial Markets directly improve the well-being of consumers
Mortgage-Backed Securities
20. The return expected over the next period on one asset relative to the alternative asset.
Foreign Bonds
easily standardized - widely accepted - divisible and not deteriorate quickly
Expected Return
Banker's Acceptance
21. Lower excess supply and lower price will fall and interest rates will rise
How Financial Markets promote economic efficiency
Corporate Bond Default risk
Hs a greater upward shift
Bd < Bs
22. Greater incentive to borrow and less to lend.
Mortgage-Backed Securities
Fiat Money
When real rate is low
Why returns are more volatile for Long-Term bonds
23. 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.
OTC
Humped Yield Curves
Evolution of the Payment System
Bd < Bs
24. A share of ownership in a corporation
Bd > Bs
inflation
common stock
The Expectation Approach
25. 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
When real rate is low
Slope upward
The Preferred Habitat Approach
who determines our money supply
26. The degree of uncertainty associated with the return on one asset relative to alternative assets.
Risk
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Money Market
who determines our money supply
27. Yields similar for all maturities
Real world obervations
Commodity Money
increases in money supply causes
Flat yield curves
28. Short-Term Debt Instruments
business cycle
Unit of Account
How Financial Markets promote economic efficiency
Money Market
29. Excess liquidity is spent on goods and services
business cycle
direct impact
Why returns are more volatile for Long-Term bonds
Long-Term Maturities (Bond Market)
30. Lower transaction costs - reduce risk - asymmetric information.
Eurocurrency
Income effect
banks and money supply
Function of Financial Intermediaries
31. Relationship among yields of different maturities of hte same type of security.
monetary policy
Term Structure
Downward Slopes
Coupon Bond
32. Principal plus interest paid to lender at given maturity date
Simple Loan
Use present value calculations
Function of Financial Intermediaries
Short-Term Maturity
33. Comparing payoffs at different points in time
Medium of Exchange
Use present value calculations
Real Interest Rate
Coupon Bond
34. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period
Velocity
Supply and Demand for Bonds
Money Market
Ex Ante
35. The percent of available labor force unemployed
Bd < Bs
unemployment rate
Downward
Real Interest Rate
36. Precious Metals or another valueable commodity
Mortgage-Backed Securities
Higher Returns
Commodity Money
Banker's Acceptance
37. How interest rates on bonds of different maturities move over time
who determines our money supply
Repo
Together
federal funds rate
38. Nominal interest rate is not adjusted for inflation.
Corporate Bonds
Slope upward
Interest rate
role of money
39. Lower the equilibrium price and interest rate.
T-Bonds
function of financial markets
Bd = Bs
banks and money supply
40. 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.
common stock
The Expectation Approach
Foreign Bonds
Humped Yield Curves
41. One to Ten year maturities which fund long-term capital investments
Intermediate-term Maturity (Capital Market)
Price vs Yields to Maturity
T-Notes
inflation
42. The total collection of pieces of property that serve to store value
Regulations increase information available to investors which does what?
Wealth
Real Interest Rate
Intermediate-term Maturity (Capital Market)
43. Instrumental in moving funds between countries
Store of Value
Capital Markets
hyperinflation
foreign exchange market
44. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
Yield to Maturity for simple loans
role of money
Eurobond
Downward
45. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
who determines our money supply
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Yield Curve
Hs a greater upward shift
46. More than 10 year maturities
Why returns are more volatile for Long-Term bonds
Risk
Long-Term Maturities (Bond Market)
M1
47. Many lead to more employment and output
increasing money supply
Money Market
Yield Curve
Interest rate
48. Bought at price below face value and face value repaid at maturity
Discount (zero coupon) Bond
Intermediate-term Maturity (Capital Market)
Mortgage-Backed Securities
hyperinflation
49. 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
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50. 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.
Tbonds
Corporate Bonds
financial markets/institutions
T-Bills