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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. Used to measure value in the economy
Risk
Bd = Bs
Unit of Account
Fiat Money
2. Many lead to more employment and output
increasing money supply
Evolution of the Payment System
Income
How Financial Markets directly improve the well-being of consumers
3. 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.
increases in money supply causes
Forms of Commercial Papers
Eurocurrency Market
Certificate of Deposit
4. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
Real world obervations
Term Structure
Long-run Movements
Real Interest Rate
5. Interest rate that equates today's value with present value of all future payments.
recession
Income
Yield to Maturity for simple loans
Long-run Movements
6. For a commodity to function efficiently as money it must be...
Forms of Commercial Papers
monetary policy
easily standardized - widely accepted - divisible and not deteriorate quickly
indirect impact
7. Yield curves most always...
financial markets
unemployment rate
Slope upward
T-Bonds
8. The central bank
who determines our money supply
common stock
Eurocurrency
Fisher Effect
9. The return expected over the next period on one asset relative to the alternative asset.
Expected Return
Why returns are more volatile for Long-Term bonds
banks and money supply
financial markets
10. Foreign currencies deposited in banks outside the home country.
Upward
T-Notes
bond
Eurocurrency
11. 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.
unemployment rate
Interest rate
Yield Curve
OTC
12. Sold in a foreign country and denominated in that country's currency.
Discount (zero coupon) Bond
Foreign Bonds
Tnotes
Commodity Money
13. The total collection of pieces of property that serve to store value
central bank
Wealth
Discount (zero coupon) Bond
Money (money supply)
14. Small depository institutions report infrequently and adjustments must be made for seasonal variations
Why Revisions are issued to money data
M1
Higher Returns
Bd < Bs
15. Lower excess supply and lower price will fall and interest rates will rise
Bd < Bs
Income effect
direct impact
Real Interest Rate
16. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Income effect
Money (money supply)
interest rate
Medium of Exchange
17. Real interest rate: the real interest rate actually realized.
Eurocurrency Market
Ex Post
Capital Markets
Downward Slopes
18. It will shift it to the right.
Price-level effect
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
federal funds rate
Supply and Demand for Bonds
19. The relationship between yield and maturity is...
Downward Slopes
Not constant
unemployment rate
Federal Funds Market
20. 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)
Bd > Bs
Upward
function of financial markets
Keynesian Model
21. What will investors expect for taking on higher default risk?
How Financial Markets directly improve the well-being of consumers
Higher Returns
Tnotes
Coupon Bond
22. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Together
Tbonds
Intermediate-term Maturity (Capital Market)
Ex Ante
23. Take the form of promissory notes - drafts - checks - and CDs
Forms of Commercial Papers
M1
Medium of Exchange
Regulations increase information available to investors which does what?
24. Greater incentive to borrow and less to lend.
Intermediate-term Maturity (Capital Market)
When real rate is low
Downward Slopes
monetary policy
25. 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.
Medium of Exchange
banks and money supply
The Liquidity Premium Modification
Repo
26. Flow of earnings per unit of time
Certificate of Deposit
M1
When real rate is low
Income
27. The percent of available labor force unemployed
Humped Yield Curves
Fisher Effect
Hs a greater upward shift
unemployment rate
28. 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
Downward Slopes
Not constant
Term structure theory
Money Market
29. Yield to maturity; a measure of an interternporal price
T-Notes
Real Interest Rate
Interest rate
business cycle
30. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
interest rate
bond market (money markets)
Keynesian Model
function of financial markets
31. No interest- rate risk
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32. Influence on business cycle - inflation - interest rates
bond
monetary policy
Bd = Bs
Income
33. Allowing consumers to time their purchases better.
Slope upward
Fiat Money
How Financial Markets directly improve the well-being of consumers
Money Market
34. 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.
financial markets/institutions
Short-Term Maturity
direct impact
interest rate
35. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Present Discount Value
Fixed Payment-Loan
Yield Curve
T-Bills
36. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
federal funds rate
Why Revisions are issued to money data
Upward Slops
T-Bills
37. 3 -6 -12 month securities with no explicit one payment and is sold at a discount. These securities are highly liquid - and can be traded in the secondary market. These are some of the safest securities.
tax structure
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Long-run Movements
T-Bills
38. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
indirect impact
bond market (money markets)
Fixed Payment-Loan
Not constant
39. They channel funds from savers to investors - thereby promoting economic efficiency
Commodity Money
Bd = Bs
Long-Term Maturities (Bond Market)
financial markets
40. If short-term interest rates are low than the yield curve slopes...
Evolution of the Payment System
Upward
Ex Ante
recession
41. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
How do regulations ensure the soundness of Financial Intermediaries?
The Expectation Approach
bond
T-Bills
42. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
interest rate
Supply and Demand for Bonds
How do regulations ensure the soundness of Financial Intermediaries?
who determines our money supply
43. How interest rates on bonds of different maturities move over time
monetary policy
Together
The Preferred Habitat Approach
M1
44. Most Common
Upward Slops
Certificate of Deposit
Yield on a Discount Basis
Upward
45. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
role of money
Corporate Bonds
Kind of risk for a bond that's maturity equals the holding period
function of financial markets
46. 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.
Mortgage-Backed Securities
Repo
Corporate Bonds
Downward
47. The increase in the price of set goods and services in a given economy over a period of time - the percent change.
Kind of risk for a bond that's maturity equals the holding period
inflation
Slope upward
Income
48. Praises rising at a fast and furious pace
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Real world obervations
hyperinflation
Risk
49. 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.
Eurocurrency
central bank
Capital Markets
Forms of Commercial Papers
50. 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.
Price vs Yields to Maturity
Income effect
T-Bonds
Banker's Acceptance