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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. Relationship among yields of different maturities of hte same type of security.
T-Bills
central bank
Term Structure
Risk
2. They have a higher interest-rate risk.
monetary policy
Why returns are more volatile for Long-Term bonds
unemployment rate
business cycle
3. If the short-term interest rates are high than the yield curve slopes?
Downward
Downward Slopes
Tbonds
Keynesian Model
4. Interest rate that equates today's value with present value of all future payments.
Yield to Maturity for simple loans
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Discount (zero coupon) Bond
Together
5. For a commodity to function efficiently as money it must be...
Yield Curve
easily standardized - widely accepted - divisible and not deteriorate quickly
indirect impact
interest rate
6. Rare
role of money
Downward Slopes
Tbonds
T-Bills
7. Reduces adverse selection - moral hazard - and insider trading.
Supply and Demand for Bonds
Regulations increase information available to investors which does what?
Downward
The Preferred Habitat Approach
8. 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.
T-Bonds
Supply and Demand for Bonds
Humped Yield Curves
Fiat Money
9. Pays owner of bond a fixed payment - until maturity when it pays off face par value
Bd < Bs
Money Market
Coupon Bond
Use present value calculations
10. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
bond market (money markets)
Risk
Upward Slops
Medium of Exchange
11. The percent of available labor force unemployed
Together
inflation
unemployment rate
Real Interest Rate
12. 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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13. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Why Revisions are issued to money data
Eurocurrency Market
unemployment rate
foreign exchange market
14. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.
unemployment rate
Tnotes
Yield on a Discount Basis
Eurocurrency
15. Alters publics liquidity and influences spending through portfolio adjustment
Intermediate-term Maturity (Capital Market)
increases in money supply causes
Evolution of the Payment System
bond market (money markets)
16. Producing an efficient allocation of capital - which increases production
M1
Foreign Bonds
Term structure theory
How Financial Markets promote economic efficiency
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
T-Bills
Discount (zero coupon) Bond
unemployment rate
18. Real interest rate: the real interest rate actually realized.
tax structure
When real rate is high
common stock
Ex Post
19. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
Not constant
Humped Yield Curves
Corporate Bond Default risk
How do regulations ensure the soundness of Financial Intermediaries?
20. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
financial markets/institutions
Price vs Yields to Maturity
Hs a greater upward shift
federal funds rate
21. 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
Repo
Use present value calculations
Kind of risk for a bond that's maturity equals the holding period
The Preferred Habitat Approach
22. Long-Term Debt and Equity Instruments
Long-run Movements
Simple Loan
Capital Markets
who determines our money supply
23. Sold in a foreign country and denominated in that country's currency.
Foreign Bonds
Function of Financial Intermediaries
T-Bonds
Eurocurrency Market
24. Flow of earnings per unit of time
Why Revisions are issued to money data
Expected Return
Corporate Bond Default risk
Income
25. Lower excess demand and lower price will rise and interest rates will fall
Ex Ante
Bd > Bs
Store of Value
Tbonds
26. 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)
Foreign Bonds
How Financial Markets promote economic efficiency
Keynesian Model
Short-Term Maturity
27. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Fisher Effect
T-Bonds
Fixed Payment-Loan
recession
28. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
who determines our money supply
central bank
T-Bills
increases in money supply causes
29. 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
increases in money supply causes
Downward Slopes
When real rate is high
30. What kind of movements should we pay attention to in money supply numbers?
M1
Evolution of the Payment System
financial markets
Long-run Movements
31. No interest- rate risk
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32. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
Tnotes
indirect impact
Eurocurrency
Use present value calculations
33. Small depository institutions report infrequently and adjustments must be made for seasonal variations
Forms of Commercial Papers
Why Revisions are issued to money data
Interest rate
Fiat Money
34. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Certificate of Deposit
Money (money supply)
T-Bills
Unit of Account
35. A dollar paid to you one year from now is less valueable than a dollar paid to you today
Kind of risk for a bond that's maturity equals the holding period
Present Discount Value
Term structure theory
Keynesian Model
36. Excess liquidity is spent on goods and services
Why Revisions are issued to money data
Eurocurrency Market
direct impact
Ex Post
37. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
financial markets/institutions
common stock
foreign exchange market
Fisher Effect
38. The degree of uncertainty associated with the return on one asset relative to alternative assets.
Interest rate
Real Interest Rate
Risk
recession
39. What will investors expect for taking on higher default risk?
T-Bills
who determines our money supply
Higher Returns
How Financial Markets directly improve the well-being of consumers
40. Periods of declining aggregate output - unemployment high - investment is low.
recession
OTC
Not constant
Wealth
41. The higher the default risk means the yield curve...
business cycle
interest rate
Intermediate-term Maturity (Capital Market)
Hs a greater upward shift
42. 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.
indirect impact
Supply and Demand for Bonds
Present Discount Value
Income effect
43. 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.
Supply and Demand for Bonds
Eurocurrency
Price-level effect
Interest rate
44. Investors are concerned about the after tax return on bonds
foreign exchange market
Slope upward
tax structure
Capital Markets
45. 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.
Federal Funds Market
easily standardized - widely accepted - divisible and not deteriorate quickly
Together
who determines our money supply
46. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
T-Bonds
financial markets/institutions
How Financial Markets promote economic efficiency
Simple Loan
47. Comparing payoffs at different points in time
Yield on a Discount Basis
Use present value calculations
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Wealth
48. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period
Velocity
Higher Returns
When real rate is low
Discount (zero coupon) Bond
49. 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
Expected Return
Corporate Bonds
bond market (money markets)
Real world obervations
50. Bond denominated in a currency other than that of the country in which it is sold.
Upward Slops
business cycle
Eurobond
Corporate Bonds