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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. 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.
Regulations increase information available to investors which does what?
Repo
common stock
Yield on a Discount Basis
2. 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.
Bd < Bs
bond
Federal Funds Market
increasing money supply
3. Greater incentive to borrow and less to lend.
When real rate is low
Risk
M1
Higher Returns
4. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
Corporate Bonds
T-Bills
Fisher Effect
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
5. Precious Metals or another valueable commodity
Term Structure
Commodity Money
Interest rate
Higher Returns
6. Intermediate Yields are highest
easily standardized - widely accepted - divisible and not deteriorate quickly
common stock
Bd < Bs
Humped Yield Curves
7. 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.
Yield Curve
Yield on a Discount Basis
Income effect
The Liquidity Premium Modification
8. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Higher Returns
Eurocurrency Market
hyperinflation
common stock
9. Lower the equilibrium price and interest rate.
Money (money supply)
Bd = Bs
direct impact
business cycle
10. The higher the default risk means the yield curve...
Capital Markets
Hs a greater upward shift
federal funds rate
Expected Return
11. Foreign currencies deposited in banks outside the home country.
Eurocurrency
Corporate Bonds
Eurocurrency Market
who determines our money supply
12. Used to measure value in the economy
financial markets
Hs a greater upward shift
banks and money supply
Unit of Account
13. When bond is at par - the yield equals the coupon rate. The price and yield are negatively related. The yield greater than coupon rate when bond price is below par.
inflation
Price vs Yields to Maturity
Money (money supply)
Fiat Money
14. Nominal interest rate is not adjusted for inflation.
Kind of risk for a bond that's maturity equals the holding period
Ex Post
Interest rate
When real rate is low
15. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
federal funds rate
Function of Financial Intermediaries
unemployment rate
T-Bills
16. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Fixed Payment-Loan
Mortgage-Backed Securities
Real world obervations
Income effect
17. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
Real Interest Rate
Certificate of Deposit
Medium of Exchange
increases in money supply causes
18. Real interest rate: the real interest rate actually realized.
Yield Curve
How Financial Markets promote economic efficiency
Ex Post
The Liquidity Premium Modification
19. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
indirect impact
Price-level effect
role of money
Discount (zero coupon) Bond
20. Yield curves most always...
Kind of risk for a bond that's maturity equals the holding period
central bank
Slope upward
Expected Return
21. Financial instruments whose return is based on the underlying returns on mortgage loans.
Mortgage-Backed Securities
Velocity
who determines our money supply
The Preferred Habitat Approach
22. 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.
interest rate
Term structure theory
indirect impact
OTC
23. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Forms of Commercial Papers
Ex Post
Long-run Movements
Medium of Exchange
24. Lower excess demand and lower price will rise and interest rates will fall
direct impact
Regulations increase information available to investors which does what?
Hs a greater upward shift
Bd > Bs
25. Flow of earnings per unit of time
The Liquidity Premium Modification
Real Interest Rate
Income
Evolution of the Payment System
26. 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.
T-Bonds
financial markets/institutions
M1
Short-Term Maturity
27. Many lead to more employment and output
Not constant
Tbonds
Use present value calculations
increasing money supply
28. The percent of available labor force unemployed
unemployment rate
Term Structure
inflation
Long-Term Maturities (Bond Market)
29. Held for one- ten years.
T-Notes
indirect impact
Together
Wealth
30. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
How Financial Markets directly improve the well-being of consumers
Downward Slopes
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?
31. Small depository institutions report infrequently and adjustments must be made for seasonal variations
Bd > Bs
Income effect
Why Revisions are issued to money data
Slope upward
32. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits
Term Structure
How Financial Markets directly improve the well-being of consumers
How do regulations ensure the soundness of Financial Intermediaries?
M1
33. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
Tnotes
T-Bills
T-Notes
indirect impact
34. Paper currency - has no real value
federal funds rate
Fiat Money
The Liquidity Premium Modification
Upward Slops
35. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
Eurocurrency
Yield Curve
bond
Kind of risk for a bond that's maturity equals the holding period
36. 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
Price-level effect
Fisher Effect
Yield on a Discount Basis
37. Investors are concerned about the after tax return on bonds
Price-level effect
Function of Financial Intermediaries
tax structure
financial markets/institutions
38. Short-Term securities are very good substitutes for each other within investor's portfolios who collectively impact the market. There aren't separate markets for short-term and long-term securities - there is one single market.
Expected Return
Capital Markets
The Expectation Approach
Wealth
39. Relationship among yields of different maturities of hte same type of security.
monetary policy
Term Structure
T-Bills
Simple Loan
40. Used to save purchasing power; most liquid of all assets but loses value during inflation
Use present value calculations
Why Revisions are issued to money data
Store of Value
Income
41. The upward and downward movement of aggregate output produced in the economy.
Mortgage-Backed Securities
Risk
business cycle
Yield to Maturity for simple loans
42. 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.
Supply and Demand for Bonds
Interest rate
T-Bonds
Money (money supply)
43. For a commodity to function efficiently as money it must be...
Money Market
Long-Term Maturities (Bond Market)
interest rate
easily standardized - widely accepted - divisible and not deteriorate quickly
44. Bought at price below face value and face value repaid at maturity
Money (money supply)
Discount (zero coupon) Bond
monetary policy
Interest rate
45. Expectations theory forms the foundation of the slope of the curve. Liquidity Premium Theory makes Long Term permanent modifications that suggests an up ward slopping curve. Over short periods - relatives supplies of securities have an impact on yiel
Bd < Bs
Real world obervations
tax structure
Term structure theory
46. More than 10 year maturities
Bd > Bs
Corporate Bonds
Upward Slops
Long-Term Maturities (Bond Market)
47. One to Ten year maturities which fund long-term capital investments
Intermediate-term Maturity (Capital Market)
Downward
Yield to Maturity for simple loans
bond market (money markets)
48. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
Velocity
Upward Slops
federal funds rate
How Financial Markets directly improve the well-being of consumers
49. Periods of declining aggregate output - unemployment high - investment is low.
Money (money supply)
Real Interest Rate
recession
increases in money supply causes
50. 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.
who determines our money supply
Certificate of Deposit
Wealth
Fiat Money