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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. 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
role of money
Downward Slopes
direct impact
2. Small depository institutions report infrequently and adjustments must be made for seasonal variations
Not constant
Why Revisions are issued to money data
Price vs Yields to Maturity
Foreign Bonds
3. Real interest rate: the real interest rate actually realized.
Ex Post
financial markets/institutions
Function of Financial Intermediaries
Price-level effect
4. Long-Term Debt and Equity Instruments
Capital Markets
direct impact
Eurocurrency
Ex Post
5. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
Regulations increase information available to investors which does what?
business cycle
T-Bonds
Medium of Exchange
6. Reduces adverse selection - moral hazard - and insider trading.
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Regulations increase information available to investors which does what?
Ex Post
Term structure theory
7. Less than one year and service current liquidity needs
Short-Term Maturity
Present Discount Value
How Financial Markets promote economic efficiency
Term structure theory
8. The upward and downward movement of aggregate output produced in the economy.
Mortgage-Backed Securities
Fixed Payment-Loan
increasing money supply
business cycle
9. Bond denominated in a currency other than that of the country in which it is sold.
monetary policy
Income
Long-run Movements
Eurobond
10. 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)
Fixed Payment-Loan
Yield Curve
Intermediate-term Maturity (Capital Market)
Keynesian Model
11. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Term Structure
Ex Ante
When real rate is low
Yield on a Discount Basis
12. How interest rates on bonds of different maturities move over time
T-Bonds
Why returns are more volatile for Long-Term bonds
Downward Slopes
Together
13. 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.
Why Revisions are issued to money data
Supply and Demand for Bonds
Banker's Acceptance
Coupon Bond
14. 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.
Tbonds
inflation
The Liquidity Premium Modification
Money Market
15. Bought at price below face value and face value repaid at maturity
Regulations increase information available to investors which does what?
central bank
Discount (zero coupon) Bond
Bd < Bs
16. What will investors expect for taking on higher default risk?
recession
Higher Returns
interest rate
Downward
17. The relationship between yield and maturity is...
Not constant
Keynesian Model
Together
The Liquidity Premium Modification
18. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
Fisher Effect
Why returns are more volatile for Long-Term bonds
Velocity
Bd < Bs
19. Yield curves most always...
Slope upward
Downward Slopes
indirect impact
Kind of risk for a bond that's maturity equals the holding period
20. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
Corporate Bonds
Ex Ante
Yield Curve
Repo
21. Alters publics liquidity and influences spending through portfolio adjustment
Term Structure
Coupon Bond
increases in money supply causes
Banker's Acceptance
22. Yields similar for all maturities
Flat yield curves
Expected Return
Corporate Bonds
How Financial Markets directly improve the well-being of consumers
23. 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.
recession
Fixed Payment-Loan
OTC
Use present value calculations
24. Rare
Downward Slopes
direct impact
Money (money supply)
monetary policy
25. Cost of borrowing money - expressed as a percentage of the amount borrowed per year.
interest rate
Downward Slopes
central bank
Mortgage-Backed Securities
26. The increase in the price of set goods and services in a given economy over a period of time - the percent change.
Present Discount Value
inflation
T-Notes
Eurocurrency Market
27. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period
Eurobond
Mortgage-Backed Securities
Discount (zero coupon) Bond
Velocity
28. Sold in a foreign country and denominated in that country's currency.
Foreign Bonds
Eurocurrency Market
Unit of Account
Bd < Bs
29. 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.
Corporate Bonds
increasing money supply
Bd > Bs
tax structure
30. Many lead to more employment and output
Hs a greater upward shift
Why returns are more volatile for Long-Term bonds
direct impact
increasing money supply
31. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
who determines our money supply
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
bond
How do regulations ensure the soundness of Financial Intermediaries?
32. 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.
Federal Funds Market
Intermediate-term Maturity (Capital Market)
foreign exchange market
Downward Slopes
33. Investors are concerned about the after tax return on bonds
How Financial Markets promote economic efficiency
tax structure
Real Interest Rate
Fixed Payment-Loan
34. Pays owner of bond a fixed payment - until maturity when it pays off face par value
How do regulations ensure the soundness of Financial Intermediaries?
Tbonds
Coupon Bond
T-Bonds
35. 2 -5 -10 year maturities
Store of Value
Yield Curve
When real rate is high
Tnotes
36. A debt security that promises to make payments periodically for a specified period of time.
monetary policy
Income
Term structure theory
bond
37. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
role of money
business cycle
unemployment rate
indirect impact
38. 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
Real world obervations
Why Revisions are issued to money data
Commodity Money
Unit of Account
39. Intermediate Yields are highest
federal funds rate
Humped Yield Curves
recession
Mortgage-Backed Securities
40. Principal plus interest paid to lender at given maturity date
Price-level effect
Simple Loan
Evolution of the Payment System
Kind of risk for a bond that's maturity equals the holding period
41. Used to save purchasing power; most liquid of all assets but loses value during inflation
Federal Funds Market
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Store of Value
Flat yield curves
42. The percent of available labor force unemployed
T-Bills
Certificate of Deposit
unemployment rate
Risk
43. 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.
Not constant
Price vs Yields to Maturity
Interest rate
Money Market
44. The total collection of pieces of property that serve to store value
Repo
Expected Return
Wealth
The Preferred Habitat Approach
45. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Forms of Commercial Papers
The Preferred Habitat Approach
Money (money supply)
direct impact
46. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Interest rate
Medium of Exchange
The Expectation Approach
Income effect
47. More than 10 year maturities
Slope upward
Yield Curve
Long-Term Maturities (Bond Market)
Bd > Bs
48. 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.
increases in money supply causes
Price-level effect
Foreign Bonds
Forms of Commercial Papers
49. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Tnotes
Medium of Exchange
Higher Returns
Fixed Payment-Loan
50. What kind of movements should we pay attention to in money supply numbers?
Long-run Movements
Income
Term Structure
Capital Markets