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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. Lower Incentive to borrow but a greater incentive to lend.
Simple Loan
bond market (money markets)
Store of Value
When real rate is high
2. How interest rates on bonds of different maturities move over time
Together
Price vs Yields to Maturity
Hs a greater upward shift
Kind of risk for a bond that's maturity equals the holding period
3. Pays owner of bond a fixed payment - until maturity when it pays off face par value
Intermediate-term Maturity (Capital Market)
Banker's Acceptance
Coupon Bond
federal funds rate
4. The percent of available labor force unemployed
Real Interest Rate
Commodity Money
Yield to Maturity for simple loans
unemployment rate
5. 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.
Ex Ante
Real world obervations
Eurobond
OTC
6. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
Higher Returns
T-Bills
common stock
How do regulations ensure the soundness of Financial Intermediaries?
7. Real interest rate: the real interest rate actually realized.
Tnotes
central bank
Ex Post
Humped Yield Curves
8. 30 year maturities but not since 2001
role of money
Tbonds
Certificate of Deposit
function of financial markets
9. Alters publics liquidity and influences spending through portfolio adjustment
When real rate is high
who determines our money supply
Federal Funds Market
increases in money supply causes
10. Lower excess demand and lower price will rise and interest rates will fall
Regulations increase information available to investors which does what?
Unit of Account
Bd > Bs
Expected Return
11. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
The Liquidity Premium Modification
Yield to Maturity for simple loans
inflation
T-Bills
12. 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.
Coupon Bond
Certificate of Deposit
Fisher Effect
Yield to Maturity for simple loans
13. Less than one year and service current liquidity needs
Downward Slopes
OTC
Short-Term Maturity
Risk
14. At lower prices (higher i) - ceteris paribus - the quantity demanded of bonds is higher- an inverse relationship ' ' the quantity supplied of bonds is lower- a positive relationship.
Price vs Yields to Maturity
Supply and Demand for Bonds
Yield Curve
Money Market
15. The central bank
The Liquidity Premium Modification
Slope upward
When real rate is low
who determines our money supply
16. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
How Financial Markets directly improve the well-being of consumers
Eurocurrency Market
OTC
Long-run Movements
17. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
When real rate is high
Federal Funds Market
Tbonds
role of money
18. Principal plus interest paid to lender at given maturity date
Upward Slops
Money Market
Simple Loan
Supply and Demand for Bonds
19. What will investors expect for taking on higher default risk?
T-Notes
Higher Returns
monetary policy
banks and money supply
20. If short-term interest rates are low than the yield curve slopes...
Why returns are more volatile for Long-Term bonds
Tnotes
Upward
Capital Markets
21. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Slope upward
When real rate is high
Fixed Payment-Loan
Medium of Exchange
22. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Yield on a Discount Basis
Ex Ante
Bd < Bs
banks and money supply
23. Flow of earnings per unit of time
Income
Coupon Bond
Income effect
direct impact
24. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
Income
Why Revisions are issued to money data
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
T-Bonds
25. 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.
T-Bonds
Ex Post
Federal Funds Market
Eurocurrency Market
26. Short-Term Debt Instruments
recession
Money Market
Why Revisions are issued to money data
Federal Funds Market
27. They channel funds from savers to investors - thereby promoting economic efficiency
financial markets
tax structure
Interest rate
Forms of Commercial Papers
28. 2 -5 -10 year maturities
Downward
Price vs Yields to Maturity
Fiat Money
Tnotes
29. For a commodity to function efficiently as money it must be...
easily standardized - widely accepted - divisible and not deteriorate quickly
T-Bills
Velocity
Ex Ante
30. 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
Slope upward
Real Interest Rate
monetary policy
The Preferred Habitat Approach
31. The total collection of pieces of property that serve to store value
Wealth
T-Bonds
tax structure
Federal Funds Market
32. Paper currency - has no real value
T-Bills
Fiat Money
Not constant
Interest rate
33. Precious Metals or another valueable commodity
Commodity Money
When real rate is high
common stock
Medium of Exchange
34. It will shift it to the right.
financial markets/institutions
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
tax structure
The Expectation Approach
35. Investors are concerned about the after tax return on bonds
tax structure
central bank
Function of Financial Intermediaries
Fiat Money
36. One to Ten year maturities which fund long-term capital investments
Bd < Bs
Risk
Fiat Money
Intermediate-term Maturity (Capital Market)
37. Crucial role in creation of money
Keynesian Model
Not constant
When real rate is high
banks and money supply
38. 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.
Long-run Movements
Price-level effect
Yield on a Discount Basis
Present Discount Value
39. Small depository institutions report infrequently and adjustments must be made for seasonal variations
interest rate
Eurobond
Risk
Why Revisions are issued to money data
40. Take the form of promissory notes - drafts - checks - and CDs
Why Revisions are issued to money data
Forms of Commercial Papers
Discount (zero coupon) Bond
Interest rate
41. Excess liquidity is spent on goods and services
Mortgage-Backed Securities
Money (money supply)
The Liquidity Premium Modification
direct impact
42. Comparing payoffs at different points in time
indirect impact
bond
Use present value calculations
Evolution of the Payment System
43. Determines interest rates
function of financial markets
Risk
Yield Curve
bond market (money markets)
44. More than 10 year maturities
recession
bond market (money markets)
Long-Term Maturities (Bond Market)
OTC
45. Influence on business cycle - inflation - interest rates
Upward Slops
monetary policy
Bd > Bs
When real rate is high
46. 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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47. Reduces adverse selection - moral hazard - and insider trading.
Regulations increase information available to investors which does what?
Ex Post
Mortgage-Backed Securities
Why returns are more volatile for Long-Term bonds
48. Nominal interest rate is not adjusted for inflation.
Repo
Interest rate
Forms of Commercial Papers
Wealth
49. They have a higher interest-rate risk.
Yield to Maturity for simple loans
Term Structure
Banker's Acceptance
Why returns are more volatile for Long-Term bonds
50. Greater incentive to borrow and less to lend.
When real rate is low
unemployment rate
indirect impact
Bd > Bs