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Test your basic knowledge |
DSST Money And Banking
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Subjects
:
dss
,
bankingt
Instructions:
Answer 50 questions in 15 minutes.
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study here
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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. What will investors expect for taking on higher default risk?
Higher Returns
The Expectation Approach
Federal Funds Market
OTC
2. For a commodity to function efficiently as money it must be...
increasing money supply
easily standardized - widely accepted - divisible and not deteriorate quickly
federal funds rate
Money Market
3. Influence on business cycle - inflation - interest rates
role of money
recession
How Financial Markets directly improve the well-being of consumers
monetary policy
4. 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
unemployment rate
Term structure theory
How Financial Markets promote economic efficiency
Present Discount Value
5. The upward and downward movement of aggregate output produced in the economy.
Bd = Bs
business cycle
easily standardized - widely accepted - divisible and not deteriorate quickly
Intermediate-term Maturity (Capital Market)
6. Intermediate Yields are highest
financial markets/institutions
who determines our money supply
Humped Yield Curves
Fiat Money
7. Alters publics liquidity and influences spending through portfolio adjustment
increases in money supply causes
Why returns are more volatile for Long-Term bonds
Not constant
Tbonds
8. How interest rates on bonds of different maturities move over time
Use present value calculations
Together
easily standardized - widely accepted - divisible and not deteriorate quickly
who determines our money supply
9. Lower excess supply and lower price will fall and interest rates will rise
Tbonds
increases in money supply causes
Bd < Bs
Evolution of the Payment System
10. Most Common
Ex Post
Tnotes
Upward Slops
How do regulations ensure the soundness of Financial Intermediaries?
11. Reduces adverse selection - moral hazard - and insider trading.
Regulations increase information available to investors which does what?
Wealth
bond market (money markets)
banks and money supply
12. Financial instruments whose return is based on the underlying returns on mortgage loans.
interest rate
central bank
Term Structure
Mortgage-Backed Securities
13. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Ex Ante
role of money
Medium of Exchange
M1
14. 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
Keynesian Model
Long-run Movements
Downward
15. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
role of money
Unit of Account
hyperinflation
Downward Slopes
16. 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.
direct impact
T-Bonds
Price-level effect
Downward
17. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
Wealth
easily standardized - widely accepted - divisible and not deteriorate quickly
Yield Curve
tax structure
18. Lower excess demand and lower price will rise and interest rates will fall
Bd > Bs
Corporate Bond Default risk
Certificate of Deposit
Wealth
19. Yield curves most always...
Slope upward
common stock
Money (money supply)
recession
20. Crucial role in creation of money
banks and money supply
Humped Yield Curves
Ex Post
easily standardized - widely accepted - divisible and not deteriorate quickly
21. Determines interest rates
How Financial Markets promote economic efficiency
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Upward
bond market (money markets)
22. What kind of movements should we pay attention to in money supply numbers?
Store of Value
Higher Returns
Long-run Movements
Downward Slopes
23. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
business cycle
Discount (zero coupon) Bond
How do regulations ensure the soundness of Financial Intermediaries?
T-Bonds
24. Relationship among yields of different maturities of hte same type of security.
Term Structure
Together
Unit of Account
federal funds rate
25. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
The Preferred Habitat Approach
Use present value calculations
Fixed Payment-Loan
indirect impact
26. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Mortgage-Backed Securities
Medium of Exchange
foreign exchange market
Ex Post
27. Periods of declining aggregate output - unemployment high - investment is low.
Function of Financial Intermediaries
Income effect
recession
Foreign Bonds
28. The percent of available labor force unemployed
unemployment rate
Tnotes
The Expectation Approach
Function of Financial Intermediaries
29. Used to measure value in the economy
Unit of Account
Repo
Corporate Bond Default risk
Yield Curve
30. Excess liquidity is spent on goods and services
direct impact
Simple Loan
interest rate
T-Bonds
31. Bringing together of buyers and sellers of financial securities to establish prices; includes banks - savings and loans - credit unions - investment banks - and brokers - mutual funds - and bond markets.
financial markets/institutions
T-Notes
The Liquidity Premium Modification
Expected Return
32. 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.
The Expectation Approach
unemployment rate
T-Bills
interest rate
33. Bought at price below face value and face value repaid at maturity
who determines our money supply
common stock
Discount (zero coupon) Bond
Ex Ante
34. The relationship between yield and maturity is...
Not constant
inflation
Present Discount Value
Discount (zero coupon) Bond
35. 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.
Supply and Demand for Bonds
Commodity Money
central bank
inflation
36. Held for one- ten years.
Tnotes
T-Notes
How do regulations ensure the soundness of Financial Intermediaries?
Commodity Money
37. Less than one year and service current liquidity needs
T-Notes
Short-Term Maturity
Tbonds
Discount (zero coupon) Bond
38. Long-Term Debt and Equity Instruments
Regulations increase information available to investors which does what?
Capital Markets
increases in money supply causes
M1
39. Used to save purchasing power; most liquid of all assets but loses value during inflation
When real rate is low
Store of Value
Discount (zero coupon) Bond
Corporate Bond Default risk
40. It will shift it to the right.
Short-Term Maturity
Term structure theory
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Yield on a Discount Basis
41. Rare
Downward Slopes
bond
Fisher Effect
Why Revisions are issued to money data
42. 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.
Long-Term Maturities (Bond Market)
Eurocurrency
Medium of Exchange
The Liquidity Premium Modification
43. 2 -5 -10 year maturities
Unit of Account
Mortgage-Backed Securities
Tnotes
function of financial markets
44. Small depository institutions report infrequently and adjustments must be made for seasonal variations
Why Revisions are issued to money data
Store of Value
increasing money supply
Price-level effect
45. A share of ownership in a corporation
increasing money supply
common stock
Supply and Demand for Bonds
Yield on a Discount Basis
46. More than 10 year maturities
who determines our money supply
Long-Term Maturities (Bond Market)
Mortgage-Backed Securities
banks and money supply
47. Real interest rate: the real interest rate actually realized.
Downward
Income effect
Ex Post
unemployment rate
48. The degree of uncertainty associated with the return on one asset relative to alternative assets.
Yield to Maturity for simple loans
Why Revisions are issued to money data
Income
Risk
49. Bond denominated in a currency other than that of the country in which it is sold.
Discount (zero coupon) Bond
Long-Term Maturities (Bond Market)
bond market (money markets)
Eurobond
50. Higher default risk compared to municipal Bonds
How do regulations ensure the soundness of Financial Intermediaries?
Corporate Bonds
Corporate Bond Default risk
Eurobond
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