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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. 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.
Price-level effect
Banker's Acceptance
Eurocurrency
Federal Funds Market
2. Yield curves most always...
Use present value calculations
Slope upward
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
who determines our money supply
3. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
Together
bond
T-Bills
Higher Returns
4. A rise in the price level causes the demand for money at each interest rates to increase and the demand curve to shift to the right.
Fixed Payment-Loan
Hs a greater upward shift
Price-level effect
hyperinflation
5. 2 -5 -10 year maturities
Corporate Bonds
Tnotes
Fixed Payment-Loan
M1
6. Cost of borrowing money - expressed as a percentage of the amount borrowed per year.
Unit of Account
central bank
Slope upward
interest rate
7. Yields similar for all maturities
Higher Returns
Flat yield curves
Fixed Payment-Loan
Tbonds
8. Influence on business cycle - inflation - interest rates
indirect impact
Federal Funds Market
bond
monetary policy
9. Take the form of promissory notes - drafts - checks - and CDs
Forms of Commercial Papers
Not constant
Unit of Account
Discount (zero coupon) Bond
10. Less than one year and service current liquidity needs
Repo
Evolution of the Payment System
How Financial Markets directly improve the well-being of consumers
Short-Term Maturity
11. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
Eurocurrency
Bd < Bs
Forms of Commercial Papers
indirect impact
12. Bond denominated in a currency other than that of the country in which it is sold.
Repo
Mortgage-Backed Securities
Eurobond
Foreign Bonds
13. 30 year maturities but not since 2001
function of financial markets
Tbonds
Capital Markets
increases in money supply causes
14. Most Common
Hs a greater upward shift
Fixed Payment-Loan
Function of Financial Intermediaries
Upward Slops
15. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
federal funds rate
Tbonds
Humped Yield Curves
Corporate Bond Default risk
16. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
Forms of Commercial Papers
T-Bonds
How do regulations ensure the soundness of Financial Intermediaries?
Repo
17. Long-Term Debt and Equity Instruments
Capital Markets
Simple Loan
The Liquidity Premium Modification
business cycle
18. They channel funds from savers to investors - thereby promoting economic efficiency
Keynesian Model
Why returns are more volatile for Long-Term bonds
bond
financial markets
19. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
Federal Funds Market
central bank
Fisher Effect
increases in money supply causes
20. They have a higher interest-rate risk.
Bd < Bs
Why returns are more volatile for Long-Term bonds
Present Discount Value
Expected Return
21. 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.
Downward
The Liquidity Premium Modification
Unit of Account
financial markets
22. Investors are concerned about the after tax return on bonds
Real world obervations
tax structure
Regulations increase information available to investors which does what?
Present Discount Value
23. Intermediate Yields are highest
increases in money supply causes
Humped Yield Curves
financial markets
Income effect
24. Crucial role in creation of money
banks and money supply
Real Interest Rate
inflation
Use present value calculations
25. Precious Metals or another valueable commodity
Commodity Money
Evolution of the Payment System
OTC
Real world obervations
26. The higher the default risk means the yield curve...
tax structure
Hs a greater upward shift
Yield on a Discount Basis
increasing money supply
27. Allowing consumers to time their purchases better.
Term structure theory
How Financial Markets promote economic efficiency
Money Market
How Financial Markets directly improve the well-being of consumers
28. 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.
Short-Term Maturity
function of financial markets
Yield Curve
Repo
29. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
Regulations increase information available to investors which does what?
Fixed Payment-Loan
T-Bills
Real Interest Rate
30. Excess liquidity is spent on goods and services
direct impact
Supply and Demand for Bonds
Repo
inflation
31. Relationship among yields of different maturities of hte same type of security.
Upward Slops
tax structure
Term Structure
Medium of Exchange
32. Producing an efficient allocation of capital - which increases production
Repo
How Financial Markets promote economic efficiency
Humped Yield Curves
Foreign Bonds
33. The relationship between yield and maturity is...
Not constant
Interest rate
tax structure
Repo
34. 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.
Price-level effect
The Liquidity Premium Modification
Downward
Supply and Demand for Bonds
35. Held for one- ten years.
T-Notes
financial markets/institutions
Velocity
The Preferred Habitat Approach
36. When interest rates are high relative to past rates - investors expect them to decline and the prices of bonds to rise in the future resulting in big capital gains. Investors would then favor long term securities which drives up price and lowers yiel
Real world obervations
Upward
Not constant
who determines our money supply
37. The degree of uncertainty associated with the return on one asset relative to alternative assets.
Unit of Account
Mortgage-Backed Securities
Risk
Income effect
38. If the short-term interest rates are high than the yield curve slopes?
OTC
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Downward
How do regulations ensure the soundness of Financial Intermediaries?
39. Many lead to more employment and output
increasing money supply
increases in money supply causes
Fisher Effect
Price-level effect
40. Short-Term Debt Instruments
monetary policy
Slope upward
Money Market
When real rate is high
41. The upward and downward movement of aggregate output produced in the economy.
Humped Yield Curves
business cycle
How Financial Markets directly improve the well-being of consumers
Long-Term Maturities (Bond Market)
42. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Eurocurrency Market
Unit of Account
easily standardized - widely accepted - divisible and not deteriorate quickly
How do regulations ensure the soundness of Financial Intermediaries?
43. Bought at price below face value and face value repaid at maturity
Mortgage-Backed Securities
Discount (zero coupon) Bond
Humped Yield Curves
Long-run Movements
44. Alters publics liquidity and influences spending through portfolio adjustment
Bd < Bs
increases in money supply causes
central bank
When real rate is high
45. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
Flat yield curves
role of money
Evolution of the Payment System
function of financial markets
46. The increase in the price of set goods and services in a given economy over a period of time - the percent change.
Higher Returns
tax structure
How Financial Markets promote economic efficiency
inflation
47. Used to measure value in the economy
Real Interest Rate
Regulations increase information available to investors which does what?
Unit of Account
federal funds rate
48. Comparing payoffs at different points in time
Term Structure
Function of Financial Intermediaries
role of money
Use present value calculations
49. 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.
Income effect
Repo
Tbonds
Humped Yield Curves
50. A debt security that promises to make payments periodically for a specified period of time.
bond
hyperinflation
Intermediate-term Maturity (Capital Market)
Use present value calculations