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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. 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.
Tbonds
Downward
central bank
Capital Markets
2. Greater incentive to borrow and less to lend.
Evolution of the Payment System
Keynesian Model
Wealth
When real rate is low
3. Cost of borrowing money - expressed as a percentage of the amount borrowed per year.
Corporate Bonds
common stock
interest rate
Coupon Bond
4. Sold in a foreign country and denominated in that country's currency.
The Liquidity Premium Modification
T-Bills
The Preferred Habitat Approach
Foreign Bonds
5. 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.
OTC
direct impact
The Liquidity Premium Modification
role of money
6. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period
Velocity
increasing money supply
banks and money supply
who determines our money supply
7. A debt security that promises to make payments periodically for a specified period of time.
bond
Keynesian Model
The Liquidity Premium Modification
Mortgage-Backed Securities
8. Determines interest rates
Upward Slops
Price vs Yields to Maturity
bond market (money markets)
Coupon Bond
9. 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.
Upward
Certificate of Deposit
Term Structure
Commodity Money
10. How interest rates on bonds of different maturities move over time
T-Bonds
Together
hyperinflation
Eurocurrency
11. Lower excess demand and lower price will rise and interest rates will fall
Price-level effect
Real Interest Rate
Banker's Acceptance
Bd > Bs
12. The relationship between yield and maturity is...
Not constant
T-Notes
Upward
How Financial Markets directly improve the well-being of consumers
13. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
recession
How do regulations ensure the soundness of Financial Intermediaries?
Tbonds
foreign exchange market
14. Reduces adverse selection - moral hazard - and insider trading.
Corporate Bond Default risk
monetary policy
Fixed Payment-Loan
Regulations increase information available to investors which does what?
15. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits
direct impact
Money Market
M1
Regulations increase information available to investors which does what?
16. 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.
Store of Value
recession
Supply and Demand for Bonds
Together
17. 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.
Bd = Bs
Income effect
M1
monetary policy
18. What will investors expect for taking on higher default risk?
monetary policy
Yield on a Discount Basis
Higher Returns
federal funds rate
19. The percent of available labor force unemployed
unemployment rate
central bank
increasing money supply
Interest rate
20. Lower Incentive to borrow but a greater incentive to lend.
tax structure
Bd = Bs
Upward
When real rate is high
21. What kind of movements should we pay attention to in money supply numbers?
Short-Term Maturity
Tnotes
Long-run Movements
Federal Funds Market
22. Yield curves most always...
Together
T-Notes
Slope upward
common stock
23. Bought at price below face value and face value repaid at maturity
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Bd < Bs
Discount (zero coupon) Bond
Upward
24. If the short-term interest rates are high than the yield curve slopes?
Downward
foreign exchange market
Downward Slopes
Money Market
25. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Money (money supply)
Real world obervations
Medium of Exchange
banks and money supply
26. Less than one year and service current liquidity needs
Money (money supply)
Repo
Short-Term Maturity
Higher Returns
27. Interest rate that equates today's value with present value of all future payments.
Price vs Yields to Maturity
Term structure theory
Yield to Maturity for simple loans
Function of Financial Intermediaries
28. If short-term interest rates are low than the yield curve slopes...
Short-Term Maturity
Upward
Money (money supply)
Medium of Exchange
29. Bond denominated in a currency other than that of the country in which it is sold.
Present Discount Value
Eurobond
Term structure theory
Capital Markets
30. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
common stock
Evolution of the Payment System
Present Discount Value
Income effect
31. Small depository institutions report infrequently and adjustments must be made for seasonal variations
Yield Curve
Store of Value
Why Revisions are issued to money data
hyperinflation
32. 30 year maturities but not since 2001
Eurobond
Fisher Effect
Store of Value
Tbonds
33. 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
Yield Curve
Corporate Bonds
Bd = Bs
34. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
Together
Real Interest Rate
The Expectation Approach
Medium of Exchange
35. Used to measure value in the economy
Tbonds
Wealth
Unit of Account
indirect impact
36. The higher the default risk means the yield curve...
Federal Funds Market
Foreign Bonds
How do regulations ensure the soundness of Financial Intermediaries?
Hs a greater upward shift
37. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
Real world obervations
Yield Curve
Expected Return
How Financial Markets promote economic efficiency
38. They have a higher interest-rate risk.
Money Market
Long-run Movements
Velocity
Why returns are more volatile for Long-Term bonds
39. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
OTC
Medium of Exchange
Interest rate
role of money
40. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
role of money
Forms of Commercial Papers
Foreign Bonds
T-Bills
41. Held for one- ten years.
Medium of Exchange
Regulations increase information available to investors which does what?
T-Notes
federal funds rate
42. Allowing consumers to time their purchases better.
tax structure
Humped Yield Curves
Bd < Bs
How Financial Markets directly improve the well-being of consumers
43. More than 10 year maturities
Long-Term Maturities (Bond Market)
Price-level effect
Velocity
Long-run Movements
44. Foreign currencies deposited in banks outside the home country.
Higher Returns
Hs a greater upward shift
Eurocurrency
indirect impact
45. 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.
T-Bonds
Bd < Bs
Capital Markets
Price vs Yields to Maturity
46. Flow of earnings per unit of time
foreign exchange market
Certificate of Deposit
Money (money supply)
Income
47. Lower transaction costs - reduce risk - asymmetric information.
Function of Financial Intermediaries
who determines our money supply
Interest rate
Bd > Bs
48. 2 -5 -10 year maturities
Why returns are more volatile for Long-Term bonds
inflation
Tnotes
bond
49. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
function of financial markets
Eurocurrency Market
bond
Fisher Effect
50. A share of ownership in a corporation
Medium of Exchange
indirect impact
common stock
Yield Curve