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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. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
function of financial markets
Corporate Bond Default risk
Evolution of the Payment System
2. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
Real Interest Rate
Humped Yield Curves
Fisher Effect
Not constant
3. Lower excess demand and lower price will rise and interest rates will fall
T-Bills
Corporate Bond Default risk
Regulations increase information available to investors which does what?
Bd > Bs
4. 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
Together
Simple Loan
Supply and Demand for Bonds
5. Excess liquidity is spent on goods and services
direct impact
banks and money supply
Evolution of the Payment System
When real rate is low
6. Periods of declining aggregate output - unemployment high - investment is low.
Keynesian Model
recession
Expected Return
Capital Markets
7. 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
Fixed Payment-Loan
M1
The Preferred Habitat Approach
central bank
8. Yield curves most always...
easily standardized - widely accepted - divisible and not deteriorate quickly
Slope upward
Not constant
Fiat Money
9. How interest rates on bonds of different maturities move over time
Together
Fiat Money
OTC
tax structure
10. The total collection of pieces of property that serve to store value
Wealth
Tnotes
Bd > Bs
The Preferred Habitat Approach
11. Paper currency - has no real value
easily standardized - widely accepted - divisible and not deteriorate quickly
Fiat Money
T-Bills
increases in money supply causes
12. Lower the equilibrium price and interest rate.
Together
Bd = Bs
Yield to Maturity for simple loans
financial markets
13. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Eurocurrency Market
Certificate of Deposit
Money (money supply)
Tnotes
14. Short-Term Debt Instruments
Money Market
Bd = Bs
T-Notes
Corporate Bonds
15. Influence on business cycle - inflation - interest rates
Simple Loan
monetary policy
interest rate
How do regulations ensure the soundness of Financial Intermediaries?
16. It will shift it to the right.
central bank
common stock
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Unit of Account
17. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Money (money supply)
Interest rate
T-Notes
Mortgage-Backed Securities
18. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
indirect impact
Term structure theory
Medium of Exchange
The Expectation Approach
19. 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
T-Bonds
inflation
T-Notes
Term structure theory
20. A dollar paid to you one year from now is less valueable than a dollar paid to you today
Intermediate-term Maturity (Capital Market)
Bd = Bs
financial markets
Present Discount Value
21. A debt security that promises to make payments periodically for a specified period of time.
Unit of Account
Yield on a Discount Basis
bond
Store of Value
22. Used to measure value in the economy
Certificate of Deposit
interest rate
Unit of Account
Coupon Bond
23. Higher default risk compared to municipal Bonds
Coupon Bond
Corporate Bond Default risk
Upward Slops
Present Discount Value
24. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
Ex Post
Velocity
T-Notes
Yield Curve
25. For a commodity to function efficiently as money it must be...
easily standardized - widely accepted - divisible and not deteriorate quickly
Unit of Account
Upward
T-Bills
26. Sold in a foreign country and denominated in that country's currency.
Not constant
unemployment rate
M1
Foreign Bonds
27. If the short-term interest rates are high than the yield curve slopes?
Fiat Money
bond market (money markets)
Downward
Long-run Movements
28. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Forms of Commercial Papers
Fixed Payment-Loan
federal funds rate
Bd < Bs
29. The relationship between yield and maturity is...
Not constant
function of financial markets
financial markets/institutions
unemployment rate
30. Greater incentive to borrow and less to lend.
Long-Term Maturities (Bond Market)
Money (money supply)
Ex Post
When real rate is low
31. 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.
Money (money supply)
Not constant
Corporate Bonds
Income effect
32. Nominal interest rate is not adjusted for inflation.
Yield to Maturity for simple loans
T-Bonds
Interest rate
Wealth
33. The higher the default risk means the yield curve...
Hs a greater upward shift
role of money
monetary policy
unemployment rate
34. Crucial role in creation of money
banks and money supply
federal funds rate
How Financial Markets directly improve the well-being of consumers
Wealth
35. Used to save purchasing power; most liquid of all assets but loses value during inflation
Repo
Together
Store of Value
Tbonds
36. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
business cycle
Income effect
bond market (money markets)
Ex Ante
37. Relationship among yields of different maturities of hte same type of security.
Term Structure
business cycle
How do regulations ensure the soundness of Financial Intermediaries?
Hs a greater upward shift
38. Investors are concerned about the after tax return on bonds
increasing money supply
Mortgage-Backed Securities
tax structure
How Financial Markets directly improve the well-being of consumers
39. 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 Market
Banker's Acceptance
easily standardized - widely accepted - divisible and not deteriorate quickly
Regulations increase information available to investors which does what?
40. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
Ex Ante
easily standardized - widely accepted - divisible and not deteriorate quickly
Federal Funds Market
federal funds rate
41. A share of ownership in a corporation
Downward
unemployment rate
increases in money supply causes
common stock
42. 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.
Supply and Demand for Bonds
recession
Income effect
Fiat Money
43. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
Eurocurrency Market
Fiat Money
Federal Funds Market
function of financial markets
44. No interest- rate risk
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45. Precious Metals or another valueable commodity
Evolution of the Payment System
Eurocurrency
T-Notes
Commodity Money
46. Yield to maturity; a measure of an interternporal price
Bd < Bs
Corporate Bond Default risk
Banker's Acceptance
Interest rate
47. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
Real Interest Rate
Bd > Bs
Term Structure
Downward
48. Intermediate Yields are highest
Upward Slops
Humped Yield Curves
Higher Returns
T-Notes
49. The upward and downward movement of aggregate output produced in the economy.
How Financial Markets directly improve the well-being of consumers
Income
business cycle
Use present value calculations
50. 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.
Why returns are more volatile for Long-Term bonds
Tbonds
M1
central bank