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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 central bank
Federal Funds Market
who determines our money supply
Fixed Payment-Loan
Tnotes
2. Relationship among yields of different maturities of hte same type of security.
tax structure
Term Structure
hyperinflation
Bd = Bs
3. Comparing payoffs at different points in time
OTC
Use present value calculations
Fiat Money
Risk
4. Short-Term Debt Instruments
Corporate Bonds
Money Market
Higher Returns
Use present value calculations
5. 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?
Tbonds
How Financial Markets promote economic efficiency
foreign exchange market
6. Lower Incentive to borrow but a greater incentive to lend.
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Repo
When real rate is high
Velocity
7. The total collection of pieces of property that serve to store value
Wealth
Price-level effect
Why returns are more volatile for Long-Term bonds
Medium of Exchange
8. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
T-Bills
Income
Eurocurrency
Term structure theory
9. Nominal interest rate is not adjusted for inflation.
Interest rate
M1
financial markets/institutions
Ex Post
10. No interest- rate risk
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11. Real interest rate: the real interest rate actually realized.
The Liquidity Premium Modification
Ex Post
Yield Curve
recession
12. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
federal funds rate
Upward Slops
How do regulations ensure the soundness of Financial Intermediaries?
Money (money supply)
13. The upward and downward movement of aggregate output produced in the economy.
Risk
Discount (zero coupon) Bond
Intermediate-term Maturity (Capital Market)
business cycle
14. Bought at price below face value and face value repaid at maturity
T-Bills
Hs a greater upward shift
Higher Returns
Discount (zero coupon) Bond
15. More than 10 year maturities
Certificate of Deposit
Long-Term Maturities (Bond Market)
foreign exchange market
How do regulations ensure the soundness of Financial Intermediaries?
16. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
central bank
function of financial markets
tax structure
Price vs Yields to Maturity
17. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Income effect
Long-Term Maturities (Bond Market)
Ex Ante
Coupon Bond
18. Used to measure value in the economy
Unit of Account
monetary policy
Yield Curve
Federal Funds Market
19. Reduces adverse selection - moral hazard - and insider trading.
hyperinflation
Evolution of the Payment System
Regulations increase information available to investors which does what?
Supply and Demand for Bonds
20. Less than one year and service current liquidity needs
Short-Term Maturity
Why returns are more volatile for Long-Term bonds
Expected Return
T-Notes
21. Used to save purchasing power; most liquid of all assets but loses value during inflation
Why Revisions are issued to money data
Term structure theory
Store of Value
M1
22. Producing an efficient allocation of capital - which increases production
T-Bonds
unemployment rate
How Financial Markets promote economic efficiency
common stock
23. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
Real Interest Rate
Money Market
Price-level effect
How Financial Markets promote economic efficiency
24. Pays owner of bond a fixed payment - until maturity when it pays off face par value
Not constant
T-Bills
Coupon Bond
Why returns are more volatile for Long-Term bonds
25. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
Not constant
Tnotes
Corporate Bond Default risk
Fisher Effect
26. Crucial role in creation of money
Money (money supply)
banks and money supply
The Expectation Approach
Repo
27. Sold in a foreign country and denominated in that country's currency.
Forms of Commercial Papers
Downward
Foreign Bonds
Coupon Bond
28. Yield curves most always...
Slope upward
Kind of risk for a bond that's maturity equals the holding period
Fisher Effect
Eurobond
29. For a commodity to function efficiently as money it must be...
bond
Intermediate-term Maturity (Capital Market)
easily standardized - widely accepted - divisible and not deteriorate quickly
increasing money supply
30. Financial instruments whose return is based on the underlying returns on mortgage loans.
Mortgage-Backed Securities
Eurocurrency Market
Evolution of the Payment System
financial markets/institutions
31. Small depository institutions report infrequently and adjustments must be made for seasonal variations
Bd > Bs
Higher Returns
Why Revisions are issued to money data
federal funds rate
32. Lower the equilibrium price and interest rate.
Bd = Bs
direct impact
The Expectation Approach
Use present value calculations
33. Higher default risk compared to municipal Bonds
Corporate Bond Default risk
Discount (zero coupon) Bond
Velocity
The Liquidity Premium Modification
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
Flat yield curves
Certificate of Deposit
T-Notes
35. Yields similar for all maturities
Flat yield curves
Fiat Money
Bd = Bs
Bd < Bs
36. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
How do regulations ensure the soundness of Financial Intermediaries?
Humped Yield Curves
Yield Curve
Use present value calculations
37. 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.
Forms of Commercial Papers
Function of Financial Intermediaries
function of financial markets
OTC
38. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Corporate Bonds
function of financial markets
Fixed Payment-Loan
Humped Yield Curves
39. 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.
Price-level effect
financial markets
Flat yield curves
Real world obervations
40. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Eurocurrency Market
Commodity Money
federal funds rate
When real rate is low
41. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Medium of Exchange
inflation
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
tax structure
42. Held for one- ten years.
Hs a greater upward shift
Eurocurrency Market
common stock
T-Notes
43. Investors are concerned about the after tax return on bonds
Ex Ante
tax structure
Evolution of the Payment System
Eurocurrency Market
44. If the short-term interest rates are high than the yield curve slopes?
Foreign Bonds
increasing money supply
Downward
Long-Term Maturities (Bond Market)
45. 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
Regulations increase information available to investors which does what?
Yield on a Discount Basis
Bd = Bs
46. Precious Metals or another valueable commodity
Interest rate
Higher Returns
Commodity Money
Tnotes
47. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
function of financial markets
Evolution of the Payment System
Store of Value
Keynesian Model
48. 30 year maturities but not since 2001
Corporate Bonds
Eurocurrency
Tnotes
Tbonds
49. The increase in the price of set goods and services in a given economy over a period of time - the percent change.
Real Interest Rate
common stock
inflation
bond
50. Long-Term Debt and Equity Instruments
Bd = Bs
Capital Markets
Yield on a Discount Basis
How Financial Markets promote economic efficiency