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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 interest rate at which private depository institutions lend balances to other depository institutions usually over night
federal funds rate
Medium of Exchange
Bd = Bs
business cycle
2. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
How Financial Markets directly improve the well-being of consumers
function of financial markets
Evolution of the Payment System
tax structure
3. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Mortgage-Backed Securities
Money (money supply)
Eurocurrency Market
Corporate Bonds
4. 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
Money (money supply)
Term structure theory
Real world obervations
Flat yield curves
5. 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)
monetary policy
T-Bills
inflation
Keynesian Model
6. A dollar paid to you one year from now is less valueable than a dollar paid to you today
Present Discount Value
Humped Yield Curves
Eurobond
Certificate of Deposit
7. It will shift it to the right.
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
How do regulations ensure the soundness of Financial Intermediaries?
Supply and Demand for Bonds
Higher Returns
8. 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
role of money
Money (money supply)
Certificate of Deposit
9. Greater incentive to borrow and less to lend.
indirect impact
Medium of Exchange
T-Bills
When real rate is low
10. More than 10 year maturities
Yield Curve
Long-Term Maturities (Bond Market)
Function of Financial Intermediaries
Expected Return
11. Short-Term Debt Instruments
The Expectation Approach
When real rate is low
Money Market
Simple Loan
12. Used to measure value in the economy
Keynesian Model
Fixed Payment-Loan
Yield Curve
Unit of Account
13. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.
T-Bills
role of money
Yield on a Discount Basis
inflation
14. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Term Structure
Eurocurrency Market
Supply and Demand for Bonds
Use present value calculations
15. A share of ownership in a corporation
Bd < Bs
common stock
How do regulations ensure the soundness of Financial Intermediaries?
T-Notes
16. 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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17. What kind of movements should we pay attention to in money supply numbers?
Mortgage-Backed Securities
Term structure theory
Long-run Movements
Corporate Bonds
18. The total collection of pieces of property that serve to store value
Bd < Bs
Wealth
Price vs Yields to Maturity
Capital Markets
19. If short-term interest rates are low than the yield curve slopes...
Ex Ante
Interest rate
Upward
Eurocurrency Market
20. They have a higher interest-rate risk.
Why returns are more volatile for Long-Term bonds
recession
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Mortgage-Backed Securities
21. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
foreign exchange market
Fisher Effect
direct impact
Real world obervations
22. Less than one year and service current liquidity needs
role of money
Discount (zero coupon) Bond
Short-Term Maturity
Downward Slopes
23. The upward and downward movement of aggregate output produced in the economy.
business cycle
Bd > Bs
Flat yield curves
Keynesian Model
24. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
Long-run Movements
T-Bills
Bd < Bs
Velocity
25. For a commodity to function efficiently as money it must be...
easily standardized - widely accepted - divisible and not deteriorate quickly
tax structure
Bd < Bs
Wealth
26. They channel funds from savers to investors - thereby promoting economic efficiency
Flat yield curves
Downward Slopes
financial markets
Use present value calculations
27. Precious Metals or another valueable commodity
Commodity Money
Yield to Maturity for simple loans
Discount (zero coupon) Bond
Price vs Yields to Maturity
28. 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.
hyperinflation
Foreign Bonds
T-Bills
Real world obervations
29. Long-Term Debt and Equity Instruments
Certificate of Deposit
Upward
Capital Markets
Expected Return
30. Many lead to more employment and output
Corporate Bonds
financial markets
increasing money supply
Term Structure
31. Lower the equilibrium price and interest rate.
T-Bills
Bd = Bs
Forms of Commercial Papers
Why returns are more volatile for Long-Term bonds
32. 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.
Long-run Movements
Intermediate-term Maturity (Capital Market)
Corporate Bonds
Capital Markets
33. 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.
Capital Markets
Yield to Maturity for simple loans
central bank
Why returns are more volatile for Long-Term bonds
34. Yield to maturity; a measure of an interternporal price
Ex Post
Tbonds
foreign exchange market
Interest rate
35. The percent of available labor force unemployed
bond
Real Interest Rate
unemployment rate
How do regulations ensure the soundness of Financial Intermediaries?
36. Rare
Fixed Payment-Loan
Yield on a Discount Basis
Downward Slopes
Upward
37. Foreign currencies deposited in banks outside the home country.
Downward
Federal Funds Market
monetary policy
Eurocurrency
38. Lower excess supply and lower price will fall and interest rates will rise
Present Discount Value
Long-Term Maturities (Bond Market)
central bank
Bd < Bs
39. The degree of uncertainty associated with the return on one asset relative to alternative assets.
Bd < Bs
Real Interest Rate
Risk
Yield Curve
40. Financial instruments whose return is based on the underlying returns on mortgage loans.
Mortgage-Backed Securities
Forms of Commercial Papers
increases in money supply causes
Slope upward
41. No interest- rate risk
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42. Influence on business cycle - inflation - interest rates
Store of Value
monetary policy
Risk
Income effect
43. Bond denominated in a currency other than that of the country in which it is sold.
Money (money supply)
role of money
Yield to Maturity for simple loans
Eurobond
44. Lower transaction costs - reduce risk - asymmetric information.
Function of Financial Intermediaries
Long-Term Maturities (Bond Market)
Tnotes
increasing money supply
45. Real interest rate: the real interest rate actually realized.
Regulations increase information available to investors which does what?
Ex Post
direct impact
Unit of Account
46. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
Capital Markets
How do regulations ensure the soundness of Financial Intermediaries?
Yield Curve
Banker's Acceptance
47. Investors are concerned about the after tax return on bonds
Downward
tax structure
Slope upward
Evolution of the Payment System
48. Determines interest rates
Yield on a Discount Basis
Unit of Account
Discount (zero coupon) Bond
bond market (money markets)
49. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Corporate Bonds
When real rate is high
Ex Ante
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
50. Allowing consumers to time their purchases better.
How Financial Markets directly improve the well-being of consumers
Capital Markets
role of money
Price-level effect