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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. Used to save purchasing power; most liquid of all assets but loses value during inflation
Corporate Bond Default risk
Store of Value
Downward Slopes
Intermediate-term Maturity (Capital Market)
2. 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.
increases in money supply causes
Not constant
Price vs Yields to Maturity
Why Revisions are issued to money data
3. Used to measure value in the economy
Wealth
Unit of Account
who determines our money supply
Yield on a Discount Basis
4. 30 year maturities but not since 2001
Tbonds
financial markets
Yield on a Discount Basis
Eurobond
5. What will investors expect for taking on higher default risk?
Higher Returns
Flat yield curves
Foreign Bonds
bond
6. More than 10 year maturities
Federal Funds Market
Long-Term Maturities (Bond Market)
Higher Returns
Capital Markets
7. Crucial role in creation of money
Kind of risk for a bond that's maturity equals the holding period
Mortgage-Backed Securities
Forms of Commercial Papers
banks and money supply
8. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period
Income
T-Notes
Ex Ante
Velocity
9. 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
Tnotes
Corporate Bonds
Upward
The Preferred Habitat Approach
10. Lower the equilibrium price and interest rate.
Supply and Demand for Bonds
Eurobond
financial markets
Bd = Bs
11. 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.
Ex Ante
central bank
Humped Yield Curves
Real world obervations
12. Lower Incentive to borrow but a greater incentive to lend.
When real rate is high
The Liquidity Premium Modification
Evolution of the Payment System
inflation
13. Instrumental in moving funds between countries
Banker's Acceptance
common stock
Flat yield curves
foreign exchange market
14. 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.
Intermediate-term Maturity (Capital Market)
banks and money supply
role of money
Price-level effect
15. The total collection of pieces of property that serve to store value
Price vs Yields to Maturity
Wealth
Why returns are more volatile for Long-Term bonds
direct impact
16. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
Store of Value
The Expectation Approach
Slope upward
function of financial markets
17. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
business cycle
interest rate
Yield Curve
Long-run Movements
18. A dollar paid to you one year from now is less valueable than a dollar paid to you today
banks and money supply
T-Bills
increases in money supply causes
Present Discount Value
19. 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.
Forms of Commercial Papers
Use present value calculations
OTC
How Financial Markets directly improve the well-being of consumers
20. Reduces adverse selection - moral hazard - and insider trading.
inflation
Regulations increase information available to investors which does what?
Upward Slops
bond market (money markets)
21. If the short-term interest rates are high than the yield curve slopes?
Downward
Price-level effect
interest rate
T-Bonds
22. They have a higher interest-rate risk.
Why returns are more volatile for Long-Term bonds
Simple Loan
Price-level effect
Money (money supply)
23. Held for one- ten years.
Long-run Movements
Upward Slops
Income
T-Notes
24. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
federal funds rate
hyperinflation
Corporate Bond Default risk
T-Bonds
25. 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.
Supply and Demand for Bonds
Use present value calculations
Capital Markets
Slope upward
26. Periods of declining aggregate output - unemployment high - investment is low.
Certificate of Deposit
Eurocurrency Market
recession
foreign exchange market
27. They channel funds from savers to investors - thereby promoting economic efficiency
Eurobond
Term structure theory
financial markets
Price-level effect
28. Comparing payoffs at different points in time
Use present value calculations
Repo
Medium of Exchange
Not constant
29. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Coupon Bond
indirect impact
Long-Term Maturities (Bond Market)
Money (money supply)
30. 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.
role of money
T-Bonds
increasing money supply
Federal Funds Market
31. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits
Yield to Maturity for simple loans
T-Notes
Income
M1
32. Yields similar for all maturities
foreign exchange market
Eurocurrency
Flat yield curves
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
33. Intermediate Yields are highest
Real Interest Rate
Why returns are more volatile for Long-Term bonds
Ex Post
Humped Yield Curves
34. The return expected over the next period on one asset relative to the alternative asset.
indirect impact
inflation
Expected Return
interest rate
35. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Eurocurrency
Fisher Effect
bond
Fixed Payment-Loan
36. Real interest rate: the real interest rate actually realized.
Income effect
common stock
Ex Post
Forms of Commercial Papers
37. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
Eurocurrency Market
Price vs Yields to Maturity
Fisher Effect
How Financial Markets promote economic efficiency
38. Long-Term Debt and Equity Instruments
Downward
T-Bills
Bd > Bs
Capital Markets
39. 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.
increasing money supply
role of money
T-Bills
function of financial markets
40. Lower transaction costs - reduce risk - asymmetric information.
Function of Financial Intermediaries
Simple Loan
OTC
bond market (money markets)
41. A share of ownership in a corporation
common stock
Money (money supply)
Humped Yield Curves
Evolution of the Payment System
42. 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
T-Notes
Term structure theory
Real world obervations
Coupon Bond
43. Financial instruments whose return is based on the underlying returns on mortgage loans.
Mortgage-Backed Securities
Income effect
Slope upward
Risk
44. Bond denominated in a currency other than that of the country in which it is sold.
Eurobond
Price-level effect
Yield on a Discount Basis
Term structure theory
45. Allowing consumers to time their purchases better.
Hs a greater upward shift
Foreign Bonds
Money (money supply)
How Financial Markets directly improve the well-being of consumers
46. The percent of available labor force unemployed
unemployment rate
tax structure
Money Market
financial markets
47. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
T-Notes
role of money
federal funds rate
Fisher Effect
48. Rare
Supply and Demand for Bonds
Tnotes
Downward Slopes
Tbonds
49. Interest rate that equates today's value with present value of all future payments.
Evolution of the Payment System
Yield to Maturity for simple loans
unemployment rate
The Expectation Approach
50. No interest- rate risk
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