Test your basic knowledge |

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. How interest rates on bonds of different maturities move over time






2. Pays owner of bond a fixed payment - until maturity when it pays off face par value






3. Cost of borrowing money - expressed as a percentage of the amount borrowed per year.






4. Reduces adverse selection - moral hazard - and insider trading.






5. The upward and downward movement of aggregate output produced in the economy.






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






7. Precious Metals or another valueable commodity






8. 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.






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






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






11. 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.






12. The return expected over the next period on one asset relative to the alternative asset.






13. It will shift it to the right.






14. They have a higher interest-rate risk.






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






16. 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.






17. The percent of available labor force unemployed






18. The central bank






19. 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






20. The higher the default risk means the yield curve...






21. 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.






22. Higher default risk compared to municipal Bonds






23. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money






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






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






26. 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


27. Rare






28. 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






29. Financial instruments whose return is based on the underlying returns on mortgage loans.






30. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One






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






32. Yield curves most always...






33. What kind of movements should we pay attention to in money supply numbers?






34. Comparing payoffs at different points in time






35. Excess liquidity is spent on goods and services






36. Flow of earnings per unit of time






37. 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.






38. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.






39. Interest rate that equates today's value with present value of all future payments.






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






41. Held for one- ten years.






42. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.






43. Bought at price below face value and face value repaid at maturity






44. The increase in the price of set goods and services in a given economy over a period of time - the percent change.






45. 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.






46. Allowing consumers to time their purchases better.






47. Praises rising at a fast and furious pace






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






49. Yields similar for all maturities






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