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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. Take the form of promissory notes - drafts - checks - and CDs
Forms of Commercial Papers
Eurocurrency
who determines our money supply
federal funds rate
2. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Bd < Bs
Slope upward
Ex Ante
T-Bills
3. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
Ex Ante
Real Interest Rate
Tnotes
Ex Post
4. 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.
Regulations increase information available to investors which does what?
Slope upward
Velocity
Corporate Bonds
5. 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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6. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
common stock
How do regulations ensure the soundness of Financial Intermediaries?
indirect impact
business cycle
7. For a commodity to function efficiently as money it must be...
Why Revisions are issued to money data
When real rate is low
easily standardized - widely accepted - divisible and not deteriorate quickly
indirect impact
8. The total collection of pieces of property that serve to store value
increasing money supply
Wealth
Upward
Mortgage-Backed Securities
9. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits
tax structure
M1
inflation
Money Market
10. Small depository institutions report infrequently and adjustments must be made for seasonal variations
Certificate of Deposit
Bd > Bs
Why Revisions are issued to money data
role of money
11. Interest rate that equates today's value with present value of all future payments.
Interest rate
Yield to Maturity for simple loans
Foreign Bonds
How Financial Markets directly improve the well-being of consumers
12. 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.
Yield on a Discount Basis
Income effect
T-Notes
Money Market
13. Precious Metals or another valueable commodity
Medium of Exchange
Short-Term Maturity
Commodity Money
role of money
14. Rare
Interest rate
Certificate of Deposit
Fisher Effect
Downward Slopes
15. If the short-term interest rates are high than the yield curve slopes?
Downward
Tbonds
Price-level effect
unemployment rate
16. Higher default risk compared to municipal Bonds
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Capital Markets
Bd = Bs
Corporate Bond Default risk
17. Yield to maturity; a measure of an interternporal price
monetary policy
Interest rate
Downward Slopes
Wealth
18. Lower the equilibrium price and interest rate.
Mortgage-Backed Securities
Bd = Bs
Banker's Acceptance
Present Discount Value
19. Comparing payoffs at different points in time
increasing money supply
foreign exchange market
Use present value calculations
Not constant
20. Producing an efficient allocation of capital - which increases production
Bd = Bs
easily standardized - widely accepted - divisible and not deteriorate quickly
How Financial Markets promote economic efficiency
Eurobond
21. 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.
The Liquidity Premium Modification
Store of Value
Interest rate
tax structure
22. 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.
Medium of Exchange
Price vs Yields to Maturity
OTC
interest rate
23. Sold in a foreign country and denominated in that country's currency.
easily standardized - widely accepted - divisible and not deteriorate quickly
Income effect
recession
Foreign Bonds
24. What kind of movements should we pay attention to in money supply numbers?
banks and money supply
Money (money supply)
Long-run Movements
bond
25. Yields similar for all maturities
Bd = Bs
Flat yield curves
Upward
central bank
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)
Long-run Movements
federal funds rate
Flat yield curves
Keynesian Model
27. 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.
tax structure
Corporate Bonds
How do regulations ensure the soundness of Financial Intermediaries?
Price vs Yields to Maturity
28. 30 year maturities but not since 2001
increases in money supply causes
T-Bills
Tbonds
Ex Ante
29. A share of ownership in a corporation
Simple Loan
common stock
central bank
Fisher Effect
30. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
Income
Bd > Bs
tax structure
indirect impact
31. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
who determines our money supply
How do regulations ensure the soundness of Financial Intermediaries?
function of financial markets
Federal Funds Market
32. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Forms of Commercial Papers
Real Interest Rate
Why Revisions are issued to money data
Medium of Exchange
33. Alters publics liquidity and influences spending through portfolio adjustment
T-Notes
increases in money supply causes
Together
Function of Financial Intermediaries
34. Influence on business cycle - inflation - interest rates
Why Revisions are issued to money data
monetary policy
Fiat Money
The Preferred Habitat Approach
35. The percent of available labor force unemployed
Upward
Tbonds
unemployment rate
How do regulations ensure the soundness of Financial Intermediaries?
36. Real interest rate: the real interest rate actually realized.
Why returns are more volatile for Long-Term bonds
Bd < Bs
Hs a greater upward shift
Ex Post
37. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Interest rate
Money (money supply)
Fixed Payment-Loan
When real rate is high
38. Lower excess supply and lower price will fall and interest rates will rise
Bd < Bs
Income effect
Downward
Upward Slops
39. Used to save purchasing power; most liquid of all assets but loses value during inflation
Store of Value
The Expectation Approach
role of money
Humped Yield Curves
40. The return expected over the next period on one asset relative to the alternative asset.
Banker's Acceptance
Yield to Maturity for simple loans
Expected Return
Bd < Bs
41. Lower Incentive to borrow but a greater incentive to lend.
When real rate is high
monetary policy
Term Structure
Why Revisions are issued to money data
42. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
Fixed Payment-Loan
recession
function of financial markets
Evolution of the Payment System
43. Pays owner of bond a fixed payment - until maturity when it pays off face par value
Keynesian Model
Slope upward
Coupon Bond
Ex Ante
44. Principal plus interest paid to lender at given maturity date
Fixed Payment-Loan
Wealth
Simple Loan
common stock
45. 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
Supply and Demand for Bonds
Term structure theory
Slope upward
Downward
46. Greater incentive to borrow and less to lend.
When real rate is low
Ex Post
interest rate
Income
47. Long-Term Debt and Equity Instruments
When real rate is high
Repo
Income effect
Capital Markets
48. 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
tax structure
Flat yield curves
foreign exchange market
49. Excess liquidity is spent on goods and services
direct impact
Evolution of the Payment System
How Financial Markets promote economic efficiency
Upward Slops
50. The relationship between yield and maturity is...
indirect impact
Not constant
Wealth
Federal Funds Market