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DSST Money And Banking

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. Used to save purchasing power; most liquid of all assets but loses value during inflation






2. Intermediate Yields are highest






3. Principal plus interest paid to lender at given maturity date






4. Lower excess demand and lower price will rise and interest rates will fall






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)






6. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.






7. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.






8. Used to measure value in the economy






9. 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.






10. For a commodity to function efficiently as money it must be...






11. Periods of declining aggregate output - unemployment high - investment is low.






12. Small depository institutions report infrequently and adjustments must be made for seasonal variations






13. Short-Term Debt Instruments






14. 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






15. Promotes economic efficiency by minimizing the time spent in exchanging goods and services






16. Praises rising at a fast and furious pace






17. Held ten years or more. They pay semiannual dividends and return of principal at maturity.






18. It will shift it to the right.






19. The percent of available labor force unemployed






20. 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.






21. They channel funds from savers to investors - thereby promoting economic efficiency






22. Lower transaction costs - reduce risk - asymmetric information.






23. They have a higher interest-rate risk.






24. Allowing consumers to time their purchases better.






25. Relationship among yields of different maturities of hte same type of security.






26. Lower the equilibrium price and interest rate.






27. Instrumental in moving funds between countries






28. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits






29. 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.






30. 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.






31. The relationship between yield and maturity is...






32. Nominal interest rate is not adjusted for inflation.






33. Yield to maturity; a measure of an interternporal price






34. Alters publics liquidity and influences spending through portfolio adjustment






35. Medium of exchange; unit of account; store of value; increases the liquidity in the economy






36. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.






37. If the short-term interest rates are high than the yield curve slopes?






38. Bond denominated in a currency other than that of the country in which it is sold.






39. Lower Incentive to borrow but a greater incentive to lend.






40. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept






41. 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






42. 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.






43. The interest rate at which private depository institutions lend balances to other depository institutions usually over night






44. 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






45. The degree of uncertainty associated with the return on one asset relative to alternative assets.






46. Held for one- ten years.






47. 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.






48. What will investors expect for taking on higher default risk?






49. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period






50. Lower excess supply and lower price will fall and interest rates will rise