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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. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.






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






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






4. 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)






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






6. Precious Metals or another valueable commodity






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






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. 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.






10. Yield curves most always...






11. Investors are concerned about the after tax return on bonds






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






13. The central bank






14. 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.






15. Crucial role in creation of money






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






17. Take the form of promissory notes - drafts - checks - and CDs






18. Short-Term Debt Instruments






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






20. Alters publics liquidity and influences spending through portfolio adjustment






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






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






23. A dollar paid to you one year from now is less valueable than a dollar paid to you today






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






25. No interest- rate risk

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26. 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






27. One to Ten year maturities which fund long-term capital investments






28. It will shift it to the right.






29. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






30. If short-term interest rates are low than the yield curve slopes...






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






32. Excess liquidity is spent on goods and services






33. 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.






34. Praises rising at a fast and furious pace






35. Paper currency - has no real value






36. They have a higher interest-rate risk.






37. 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.






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






39. Influence on business cycle - inflation - interest rates






40. A debt security that promises to make payments periodically for a specified period of time.






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






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






43. The percent of available labor force unemployed






44. Nominal interest rate is not adjusted for inflation.






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






47. Greater incentive to borrow and less to lend.






48. Rare






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






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