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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. Producing an efficient allocation of capital - which increases production
role of money
Simple Loan
How Financial Markets promote economic efficiency
Coupon Bond
2. Cost of borrowing money - expressed as a percentage of the amount borrowed per year.
The Expectation Approach
increasing money supply
interest rate
banks and money supply
3. Intermediate Yields are highest
Humped Yield Curves
Hs a greater upward shift
Repo
Price vs Yields to Maturity
4. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
inflation
Short-Term Maturity
foreign exchange market
T-Bills
5. Small depository institutions report infrequently and adjustments must be made for seasonal variations
Foreign Bonds
financial markets
increases in money supply causes
Why Revisions are issued to money data
6. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Function of Financial Intermediaries
Money (money supply)
common stock
Kind of risk for a bond that's maturity equals the holding period
7. Influence on business cycle - inflation - interest rates
Money Market
monetary policy
How do regulations ensure the soundness of Financial Intermediaries?
The Preferred Habitat Approach
8. Lower excess demand and lower price will rise and interest rates will fall
Bd > Bs
Money Market
Ex Ante
Supply and Demand for Bonds
9. Alters publics liquidity and influences spending through portfolio adjustment
Money (money supply)
Bd < Bs
Corporate Bonds
increases in money supply causes
10. Yields similar for all maturities
Use present value calculations
Term structure theory
bond
Flat yield curves
11. The central bank
banks and money supply
Downward
increasing money supply
who determines our money supply
12. 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.
Not constant
Long-run Movements
Price-level effect
Federal Funds Market
13. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
Evolution of the Payment System
Downward
Short-Term Maturity
Eurocurrency Market
14. One to Ten year maturities which fund long-term capital investments
Higher Returns
Hs a greater upward shift
Corporate Bond Default risk
Intermediate-term Maturity (Capital Market)
15. They have a higher interest-rate risk.
Fisher Effect
Eurobond
Federal Funds Market
Why returns are more volatile for Long-Term bonds
16. Yield curves most always...
banks and money supply
OTC
Corporate Bond Default risk
Slope upward
17. Lower transaction costs - reduce risk - asymmetric information.
unemployment rate
How Financial Markets directly improve the well-being of consumers
Upward Slops
Function of Financial Intermediaries
18. Reduces adverse selection - moral hazard - and insider trading.
Downward
Term structure theory
Regulations increase information available to investors which does what?
Repo
19. Many lead to more employment and output
Repo
increasing money supply
Tnotes
Income effect
20. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Medium of Exchange
monetary policy
Tnotes
role of money
21. Used to measure value in the economy
Ex Post
bond
Unit of Account
Wealth
22. The upward and downward movement of aggregate output produced in the economy.
Term Structure
Certificate of Deposit
Downward Slopes
business cycle
23. Periods of declining aggregate output - unemployment high - investment is low.
Long-Term Maturities (Bond Market)
How Financial Markets directly improve the well-being of consumers
recession
Tbonds
24. 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.
Interest rate
Yield to Maturity for simple loans
Eurobond
OTC
25. Less than one year and service current liquidity needs
Price vs Yields to Maturity
Fisher Effect
T-Bills
Short-Term Maturity
26. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits
M1
How do regulations ensure the soundness of Financial Intermediaries?
Slope upward
increases in money supply causes
27. 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.
Not constant
function of financial markets
Federal Funds Market
The Liquidity Premium Modification
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
Term Structure
Eurocurrency Market
Real world obervations
increases in money supply causes
29. 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
Term Structure
Repo
common stock
30. A share of ownership in a corporation
Foreign Bonds
common stock
Not constant
foreign exchange market
31. Financial instruments whose return is based on the underlying returns on mortgage loans.
Mortgage-Backed Securities
Corporate Bond Default risk
Capital Markets
The Preferred Habitat Approach
32. Sold in a foreign country and denominated in that country's currency.
Fixed Payment-Loan
Wealth
Expected Return
Foreign Bonds
33. Instrumental in moving funds between countries
Slope upward
Fixed Payment-Loan
foreign exchange market
Wealth
34. Bought at price below face value and face value repaid at maturity
Store of Value
Discount (zero coupon) Bond
indirect impact
banks and money supply
35. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
Ex Ante
federal funds rate
Use present value calculations
Bd = Bs
36. How interest rates on bonds of different maturities move over time
Interest rate
Together
Repo
How do regulations ensure the soundness of Financial Intermediaries?
37. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
function of financial markets
Upward Slops
Coupon Bond
When real rate is low
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
Coupon Bond
OTC
M1
39. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
Capital Markets
Money (money supply)
How do regulations ensure the soundness of Financial Intermediaries?
Upward
40. Used to save purchasing power; most liquid of all assets but loses value during inflation
who determines our money supply
Slope upward
bond market (money markets)
Store of Value
41. Nominal interest rate is not adjusted for inflation.
Money Market
Unit of Account
Price-level effect
Interest rate
42. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
Interest rate
Corporate Bonds
Regulations increase information available to investors which does what?
role of money
43. Precious Metals or another valueable commodity
Federal Funds Market
interest rate
Use present value calculations
Commodity Money
44. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
Present Discount Value
Fisher Effect
Expected Return
Bd = Bs
45. Lower Incentive to borrow but a greater incentive to lend.
Tbonds
role of money
Unit of Account
When real rate is high
46. 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
increasing money supply
Expected Return
Term structure theory
Tnotes
47. Higher default risk compared to municipal Bonds
Corporate Bond Default risk
Intermediate-term Maturity (Capital Market)
Bd > Bs
Unit of Account
48. The percent of available labor force unemployed
Bd > Bs
Together
central bank
unemployment rate
49. 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.
Interest rate
Corporate Bonds
monetary policy
Evolution of the Payment System
50. The higher the default risk means the yield curve...
OTC
foreign exchange market
bond
Hs a greater upward shift