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Test your basic knowledge |
DSST Money And Banking
Start Test
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Subjects
:
dss
,
bankingt
Instructions:
Answer 50 questions in 15 minutes.
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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 relationship between yield and maturity is...
Fisher Effect
Not constant
indirect impact
role of money
2. Used to measure value in the economy
Capital Markets
Intermediate-term Maturity (Capital Market)
Unit of Account
How Financial Markets directly improve the well-being of consumers
3. More than 10 year maturities
Function of Financial Intermediaries
Term Structure
Long-Term Maturities (Bond Market)
Higher Returns
4. Paper currency - has no real value
Long-run Movements
The Liquidity Premium Modification
banks and money supply
Fiat Money
5. 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.
OTC
Slope upward
financial markets/institutions
Fixed Payment-Loan
6. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
federal funds rate
Velocity
Coupon Bond
Bd < Bs
7. The higher the default risk means the yield curve...
common stock
Money Market
When real rate is high
Hs a greater upward shift
8. Less than one year and service current liquidity needs
Downward Slopes
Yield on a Discount Basis
Short-Term Maturity
central bank
9. Alters publics liquidity and influences spending through portfolio adjustment
Medium of Exchange
indirect impact
increases in money supply causes
Eurocurrency Market
10. Precious Metals or another valueable commodity
Corporate Bond Default risk
Fixed Payment-Loan
Commodity Money
Regulations increase information available to investors which does what?
11. 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.
Certificate of Deposit
Downward Slopes
Corporate Bonds
inflation
12. 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.
Upward Slops
Store of Value
Income
Price-level effect
13. The return expected over the next period on one asset relative to the alternative asset.
The Expectation Approach
When real rate is low
Expected Return
Present Discount Value
14. Instrumental in moving funds between countries
Upward Slops
common stock
function of financial markets
foreign exchange market
15. A dollar paid to you one year from now is less valueable than a dollar paid to you today
Keynesian Model
Together
Evolution of the Payment System
Present Discount Value
16. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
Why returns are more volatile for Long-Term bonds
Yield Curve
Keynesian Model
Coupon Bond
17. Cost of borrowing money - expressed as a percentage of the amount borrowed per year.
When real rate is low
Repo
Corporate Bond Default risk
interest rate
18. 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
Discount (zero coupon) Bond
M1
Ex Ante
19. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
Kind of risk for a bond that's maturity equals the holding period
Regulations increase information available to investors which does what?
Slope upward
How do regulations ensure the soundness of Financial Intermediaries?
20. The upward and downward movement of aggregate output produced in the economy.
Eurocurrency Market
Function of Financial Intermediaries
OTC
business cycle
21. Small depository institutions report infrequently and adjustments must be made for seasonal variations
Why Revisions are issued to money data
Higher Returns
Yield on a Discount Basis
financial markets
22. 2 -5 -10 year maturities
Tnotes
Eurocurrency Market
Real Interest Rate
hyperinflation
23. What kind of movements should we pay attention to in money supply numbers?
Long-run Movements
Foreign Bonds
bond
When real rate is low
24. No interest- rate risk
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25. Foreign currencies deposited in banks outside the home country.
increasing money supply
common stock
Eurocurrency
business cycle
26. Lower transaction costs - reduce risk - asymmetric information.
Kind of risk for a bond that's maturity equals the holding period
Unit of Account
Function of Financial Intermediaries
How Financial Markets promote economic efficiency
27. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
function of financial markets
Not constant
Money Market
The Expectation Approach
28. Producing an efficient allocation of capital - which increases production
Use present value calculations
Bd = Bs
When real rate is high
How Financial Markets promote economic efficiency
29. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
indirect impact
Corporate Bonds
How Financial Markets directly improve the well-being of consumers
interest rate
30. Used to save purchasing power; most liquid of all assets but loses value during inflation
Income effect
Store of Value
Banker's Acceptance
common stock
31. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits
Kind of risk for a bond that's maturity equals the holding period
recession
M1
Interest rate
32. If short-term interest rates are low than the yield curve slopes...
Upward
Federal Funds Market
Kind of risk for a bond that's maturity equals the holding period
Term structure theory
33. Real interest rate: the real interest rate actually realized.
Federal Funds Market
Tnotes
Ex Post
easily standardized - widely accepted - divisible and not deteriorate quickly
34. The percent of available labor force unemployed
Commodity Money
increases in money supply causes
When real rate is high
unemployment rate
35. The increase in the price of set goods and services in a given economy over a period of time - the percent change.
federal funds rate
Bd > Bs
easily standardized - widely accepted - divisible and not deteriorate quickly
inflation
36. Praises rising at a fast and furious pace
hyperinflation
unemployment rate
Interest rate
Velocity
37. 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.
foreign exchange market
Bd < Bs
Wealth
Repo
38. A share of ownership in a corporation
Velocity
common stock
Why returns are more volatile for Long-Term bonds
Not constant
39. How interest rates on bonds of different maturities move over time
Real Interest Rate
Together
Hs a greater upward shift
Bd > Bs
40. Bond denominated in a currency other than that of the country in which it is sold.
Use present value calculations
Eurobond
Keynesian Model
tax structure
41. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
Present Discount Value
role of money
Wealth
When real rate is high
42. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
T-Notes
common stock
Evolution of the Payment System
hyperinflation
43. Determines interest rates
Short-Term Maturity
The Preferred Habitat Approach
Price-level effect
bond market (money markets)
44. 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
Why Revisions are issued to money data
Risk
How Financial Markets promote economic efficiency
45. Lower Incentive to borrow but a greater incentive to lend.
When real rate is high
Evolution of the Payment System
OTC
Flat yield curves
46. Short-Term Debt Instruments
The Preferred Habitat Approach
Function of Financial Intermediaries
Money Market
Bd < Bs
47. Rare
bond market (money markets)
Discount (zero coupon) Bond
M1
Downward Slopes
48. They have a higher interest-rate risk.
unemployment rate
T-Notes
Why returns are more volatile for Long-Term bonds
Bd < Bs
49. A debt security that promises to make payments periodically for a specified period of time.
bond
foreign exchange market
Flat yield curves
Real Interest Rate
50. Pays owner of bond a fixed payment - until maturity when it pays off face par value
Banker's Acceptance
indirect impact
Long-run Movements
Coupon Bond
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