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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. The increase in the price of set goods and services in a given economy over a period of time - the percent change.
Forms of Commercial Papers
Federal Funds Market
inflation
indirect impact
2. Greater incentive to borrow and less to lend.
Bd > Bs
Intermediate-term Maturity (Capital Market)
When real rate is low
Mortgage-Backed Securities
3. How interest rates on bonds of different maturities move over time
Bd < Bs
Regulations increase information available to investors which does what?
Together
Downward Slopes
4. 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.
tax structure
Higher Returns
monetary policy
The Liquidity Premium Modification
5. Flow of earnings per unit of time
financial markets
Yield Curve
Income
Function of Financial Intermediaries
6. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
Keynesian Model
Evolution of the Payment System
increasing money supply
Yield to Maturity for simple loans
7. Financial instruments whose return is based on the underlying returns on mortgage loans.
Forms of Commercial Papers
financial markets
Capital Markets
Mortgage-Backed Securities
8. 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
who determines our money supply
Interest rate
Unit of Account
9. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Bd > Bs
Capital Markets
Money (money supply)
Short-Term Maturity
10. The relationship between yield and maturity is...
Store of Value
T-Bills
Not constant
Velocity
11. 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.
Eurobond
interest rate
Interest rate
Income effect
12. 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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13. Lower excess supply and lower price will fall and interest rates will rise
Bd < Bs
Bd > Bs
Eurobond
Foreign Bonds
14. More than 10 year maturities
Eurobond
Long-Term Maturities (Bond Market)
The Liquidity Premium Modification
easily standardized - widely accepted - divisible and not deteriorate quickly
15. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Banker's Acceptance
Intermediate-term Maturity (Capital Market)
Ex Ante
Short-Term Maturity
16. Bought at price below face value and face value repaid at maturity
Mortgage-Backed Securities
Commodity Money
Discount (zero coupon) Bond
increasing money supply
17. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Bd > Bs
Eurocurrency Market
Fixed Payment-Loan
Repo
18. 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.
Bd = Bs
Certificate of Deposit
Tbonds
central bank
19. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
function of financial markets
bond market (money markets)
Real Interest Rate
Certificate of Deposit
20. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
Expected Return
function of financial markets
Keynesian Model
unemployment rate
21. Used to measure value in the economy
Yield Curve
Long-Term Maturities (Bond Market)
bond market (money markets)
Unit of Account
22. Influence on business cycle - inflation - interest rates
Not constant
Kind of risk for a bond that's maturity equals the holding period
Eurocurrency Market
monetary policy
23. Most Common
Capital Markets
Tbonds
Upward Slops
Upward
24. 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
The Expectation Approach
Eurocurrency
Real world obervations
Term Structure
25. For a commodity to function efficiently as money it must be...
easily standardized - widely accepted - divisible and not deteriorate quickly
Short-Term Maturity
Term structure theory
Foreign Bonds
26. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
Yield Curve
inflation
Term structure theory
Forms of Commercial Papers
27. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
Price-level effect
Foreign Bonds
Yield Curve
T-Bills
28. The return expected over the next period on one asset relative to the alternative asset.
Use present value calculations
Commodity Money
Expected Return
Downward Slopes
29. 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
Term Structure
Real Interest Rate
Velocity
The Preferred Habitat Approach
30. Investors are concerned about the after tax return on bonds
tax structure
banks and money supply
Yield Curve
Humped Yield Curves
31. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
indirect impact
Corporate Bond Default risk
Kind of risk for a bond that's maturity equals the holding period
Eurocurrency Market
32. A dollar paid to you one year from now is less valueable than a dollar paid to you today
Store of Value
Upward
Certificate of Deposit
Present Discount Value
33. Paper currency - has no real value
Risk
Ex Ante
Fiat Money
How do regulations ensure the soundness of Financial Intermediaries?
34. Long-Term Debt and Equity Instruments
Long-run Movements
indirect impact
Capital Markets
Eurobond
35. Lower Incentive to borrow but a greater incentive to lend.
Tbonds
Downward Slopes
Short-Term Maturity
When real rate is high
36. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Expected Return
easily standardized - widely accepted - divisible and not deteriorate quickly
Eurocurrency Market
hyperinflation
37. Used to save purchasing power; most liquid of all assets but loses value during inflation
tax structure
The Preferred Habitat Approach
Store of Value
bond market (money markets)
38. Pays owner of bond a fixed payment - until maturity when it pays off face par value
bond market (money markets)
Coupon Bond
federal funds rate
business cycle
39. If short-term interest rates are low than the yield curve slopes...
Fixed Payment-Loan
Coupon Bond
Upward
Wealth
40. What kind of movements should we pay attention to in money supply numbers?
Long-run Movements
Risk
Federal Funds Market
Term structure theory
41. 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.
Term Structure
T-Notes
Real Interest Rate
Corporate Bonds
42. Precious Metals or another valueable commodity
Commodity Money
increasing money supply
Upward Slops
Long-Term Maturities (Bond Market)
43. Lower transaction costs - reduce risk - asymmetric information.
Function of Financial Intermediaries
T-Bills
bond
Upward
44. They have a higher interest-rate risk.
Why returns are more volatile for Long-Term bonds
role of money
Ex Ante
How do regulations ensure the soundness of Financial Intermediaries?
45. The percent of available labor force unemployed
Downward Slopes
Supply and Demand for Bonds
unemployment rate
Function of Financial Intermediaries
46. Instrumental in moving funds between countries
Ex Post
Long-Term Maturities (Bond Market)
foreign exchange market
Bd > Bs
47. Foreign currencies deposited in banks outside the home country.
Downward Slopes
Corporate Bonds
How Financial Markets directly improve the well-being of consumers
Eurocurrency
48. 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.
Income effect
financial markets/institutions
Kind of risk for a bond that's maturity equals the holding period
Together
49. One to Ten year maturities which fund long-term capital investments
Capital Markets
Intermediate-term Maturity (Capital Market)
Kind of risk for a bond that's maturity equals the holding period
Yield Curve
50. Determines interest rates
hyperinflation
Yield to Maturity for simple loans
Term Structure
bond market (money markets)