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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. 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.
Supply and Demand for Bonds
Certificate of Deposit
who determines our money supply
Price vs Yields to Maturity
2. Instrumental in moving funds between countries
foreign exchange market
Real Interest Rate
Coupon Bond
Discount (zero coupon) Bond
3. Take the form of promissory notes - drafts - checks - and CDs
business cycle
Forms of Commercial Papers
bond market (money markets)
Commodity Money
4. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Price-level effect
T-Notes
Medium of Exchange
Money (money supply)
5. Most Common
Eurocurrency Market
Upward Slops
Evolution of the Payment System
foreign exchange market
6. 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.
Mortgage-Backed Securities
central bank
Bd > Bs
Price-level effect
7. 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
Downward Slopes
Banker's Acceptance
Kind of risk for a bond that's maturity equals the holding period
Term structure theory
8. 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
Unit of Account
Upward
Real world obervations
Present Discount Value
9. Alters publics liquidity and influences spending through portfolio adjustment
inflation
increases in money supply causes
bond
foreign exchange market
10. Higher default risk compared to municipal Bonds
Regulations increase information available to investors which does what?
The Expectation Approach
Corporate Bond Default risk
Downward Slopes
11. 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
The Preferred Habitat Approach
foreign exchange market
Use present value calculations
Commodity Money
12. 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?
Kind of risk for a bond that's maturity equals the holding period
Downward
Upward
13. Lower excess demand and lower price will rise and interest rates will fall
Fiat Money
Bd > Bs
Yield Curve
Income effect
14. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Simple Loan
Yield Curve
Ex Ante
Velocity
15. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
unemployment rate
interest rate
T-Bonds
Interest rate
16. Principal plus interest paid to lender at given maturity date
financial markets
Risk
Short-Term Maturity
Simple Loan
17. Yields similar for all maturities
Term structure theory
Flat yield curves
Discount (zero coupon) Bond
who determines our money supply
18. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Hs a greater upward shift
financial markets
Eurocurrency Market
Expected Return
19. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
indirect impact
When real rate is high
Fixed Payment-Loan
Price vs Yields to Maturity
20. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
Coupon Bond
role of money
OTC
hyperinflation
21. The central bank
Not constant
Simple Loan
increases in money supply causes
who determines our money supply
22. 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.
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
The Expectation Approach
Yield Curve
Certificate of Deposit
23. Lower Incentive to borrow but a greater incentive to lend.
Income
Kind of risk for a bond that's maturity equals the holding period
When real rate is high
Ex Ante
24. Less than one year and service current liquidity needs
Short-Term Maturity
Upward
Expected Return
Not constant
25. 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?
Higher Returns
Bd = Bs
Eurocurrency
26. Cost of borrowing money - expressed as a percentage of the amount borrowed per year.
interest rate
Fisher Effect
Short-Term Maturity
How Financial Markets promote economic efficiency
27. If short-term interest rates are low than the yield curve slopes...
Term structure theory
Supply and Demand for Bonds
Upward
financial markets
28. Flow of earnings per unit of time
Income
Bd > Bs
banks and money supply
recession
29. Bond denominated in a currency other than that of the country in which it is sold.
Eurobond
Why returns are more volatile for Long-Term bonds
When real rate is low
central bank
30. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Eurocurrency Market
Money (money supply)
Regulations increase information available to investors which does what?
increasing money supply
31. Long-Term debt instruments of Corporations which are held 2-30 years. These securities have excellent credit ratings and pay interest two times a year and pay at maturity. These can be redeemed for shares of stock.
hyperinflation
Use present value calculations
Corporate Bonds
recession
32. 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.
T-Bonds
Flat yield curves
Unit of Account
Federal Funds Market
33. Periods of declining aggregate output - unemployment high - investment is low.
Income effect
OTC
How Financial Markets promote economic efficiency
recession
34. Yield curves most always...
Yield Curve
Slope upward
Term Structure
Bd < Bs
35. What will investors expect for taking on higher default risk?
Together
Why returns are more volatile for Long-Term bonds
Higher Returns
Downward Slopes
36. 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)
The Liquidity Premium Modification
Keynesian Model
Function of Financial Intermediaries
Fisher Effect
37. Allowing consumers to time their purchases better.
How Financial Markets directly improve the well-being of consumers
Fisher Effect
Hs a greater upward shift
T-Notes
38. 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.
T-Bills
Capital Markets
unemployment rate
Hs a greater upward shift
39. The upward and downward movement of aggregate output produced in the economy.
role of money
business cycle
When real rate is high
Short-Term Maturity
40. 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.
Function of Financial Intermediaries
central bank
Eurobond
Yield on a Discount Basis
41. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
foreign exchange market
Evolution of the Payment System
Yield to Maturity for simple loans
Downward
42. Relationship among yields of different maturities of hte same type of security.
Real world obervations
Store of Value
Term Structure
Tnotes
43. Real interest rate: the real interest rate actually realized.
Function of Financial Intermediaries
Yield on a Discount Basis
Repo
Ex Post
44. The return expected over the next period on one asset relative to the alternative asset.
increasing money supply
Expected Return
Flat yield curves
Commodity Money
45. Long-Term Debt and Equity Instruments
Yield Curve
Commodity Money
Capital Markets
T-Bills
46. Producing an efficient allocation of capital - which increases production
Present Discount Value
increases in money supply causes
OTC
How Financial Markets promote economic efficiency
47. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
Intermediate-term Maturity (Capital Market)
Yield Curve
How do regulations ensure the soundness of Financial Intermediaries?
unemployment rate
48. Crucial role in creation of money
Yield to Maturity for simple loans
banks and money supply
Eurocurrency Market
Money Market
49. What kind of movements should we pay attention to in money supply numbers?
Risk
Long-run Movements
Present Discount Value
bond market (money markets)
50. 30 year maturities but not since 2001
Bd < Bs
Corporate Bond Default risk
Tbonds
Banker's Acceptance