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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
T-Bonds
Store of Value
Foreign Bonds
Corporate Bonds
2. Intermediate Yields are highest
Humped Yield Curves
Price-level effect
bond market (money markets)
Hs a greater upward shift
3. Principal plus interest paid to lender at given maturity date
Money Market
central bank
Simple Loan
federal funds rate
4. Lower excess demand and lower price will rise and interest rates will fall
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
bond market (money markets)
Bd > Bs
function of financial markets
5. 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)
Keynesian Model
T-Bills
increasing money supply
Long-Term Maturities (Bond Market)
6. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.
federal funds rate
Yield on a Discount Basis
Velocity
Fisher Effect
7. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Kind of risk for a bond that's maturity equals the holding period
The Expectation Approach
Ex Ante
Not constant
8. Used to measure value in the economy
central bank
indirect impact
function of financial markets
Unit of Account
9. 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.
Together
unemployment rate
Humped Yield Curves
Supply and Demand for Bonds
10. For a commodity to function efficiently as money it must be...
easily standardized - widely accepted - divisible and not deteriorate quickly
business cycle
Supply and Demand for Bonds
Why returns are more volatile for Long-Term bonds
11. Periods of declining aggregate output - unemployment high - investment is low.
Commodity Money
Federal Funds Market
Downward Slopes
recession
12. Small depository institutions report infrequently and adjustments must be made for seasonal variations
Why Revisions are issued to money data
function of financial markets
Forms of Commercial Papers
Corporate Bonds
13. Short-Term Debt Instruments
Money Market
Income effect
Flat yield curves
Store of Value
14. 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
Commodity Money
Repo
The Preferred Habitat Approach
Short-Term Maturity
15. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Medium of Exchange
Income effect
Together
central bank
16. Praises rising at a fast and furious pace
Certificate of Deposit
Real world obervations
hyperinflation
Yield on a Discount Basis
17. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
bond
T-Bonds
Fixed Payment-Loan
Upward
18. It will shift it to the right.
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Medium of Exchange
T-Bills
Humped Yield Curves
19. The percent of available labor force unemployed
unemployment rate
Bd > Bs
Long-Term Maturities (Bond Market)
bond
20. 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.
central bank
Humped Yield Curves
Eurocurrency Market
The Expectation Approach
21. They channel funds from savers to investors - thereby promoting economic efficiency
function of financial markets
When real rate is low
financial markets
Function of Financial Intermediaries
22. Lower transaction costs - reduce risk - asymmetric information.
Medium of Exchange
Simple Loan
Function of Financial Intermediaries
Supply and Demand for Bonds
23. They have a higher interest-rate risk.
easily standardized - widely accepted - divisible and not deteriorate quickly
monetary policy
Why returns are more volatile for Long-Term bonds
Real world obervations
24. Allowing consumers to time their purchases better.
Evolution of the Payment System
Long-run Movements
Price-level effect
How Financial Markets directly improve the well-being of consumers
25. Relationship among yields of different maturities of hte same type of security.
Term Structure
bond
increasing money supply
The Liquidity Premium Modification
26. Lower the equilibrium price and interest rate.
Eurocurrency
T-Notes
T-Bills
Bd = Bs
27. Instrumental in moving funds between countries
How Financial Markets directly improve the well-being of consumers
foreign exchange market
Supply and Demand for Bonds
Keynesian Model
28. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits
M1
Term structure theory
T-Bills
Fisher Effect
29. 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.
Regulations increase information available to investors which does what?
Bd < Bs
Federal Funds Market
Eurobond
30. 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.
The Expectation Approach
When real rate is low
T-Bills
business cycle
31. The relationship between yield and maturity is...
indirect impact
Regulations increase information available to investors which does what?
easily standardized - widely accepted - divisible and not deteriorate quickly
Not constant
32. Nominal interest rate is not adjusted for inflation.
financial markets
When real rate is low
Interest rate
Expected Return
33. Yield to maturity; a measure of an interternporal price
Tnotes
Interest rate
Money Market
OTC
34. Alters publics liquidity and influences spending through portfolio adjustment
Function of Financial Intermediaries
inflation
How Financial Markets promote economic efficiency
increases in money supply causes
35. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
role of money
Money (money supply)
Supply and Demand for Bonds
Eurocurrency
36. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Expected Return
Ex Post
Eurocurrency Market
direct impact
37. If the short-term interest rates are high than the yield curve slopes?
Downward
T-Bonds
increases in money supply causes
Wealth
38. Bond denominated in a currency other than that of the country in which it is sold.
Mortgage-Backed Securities
T-Bills
Eurobond
Money Market
39. Lower Incentive to borrow but a greater incentive to lend.
When real rate is high
Price-level effect
Keynesian Model
indirect impact
40. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Downward Slopes
Money (money supply)
Unit of Account
Present Discount Value
41. 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
Bd < Bs
Term structure theory
Real world obervations
Bd > Bs
42. Seller will buy back the asset at a later date and typically at a higher price. These securities are usually government securities and are used by banks and Large Corporations.
Supply and Demand for Bonds
T-Bonds
Medium of Exchange
Repo
43. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
Real world obervations
Regulations increase information available to investors which does what?
federal funds rate
M1
44. 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
Term structure theory
common stock
increasing money supply
How Financial Markets promote economic efficiency
45. The degree of uncertainty associated with the return on one asset relative to alternative assets.
Together
Velocity
Foreign Bonds
Risk
46. Held for one- ten years.
T-Notes
interest rate
Commodity Money
Ex Post
47. 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.
How Financial Markets directly improve the well-being of consumers
Medium of Exchange
Expected Return
Certificate of Deposit
48. What will investors expect for taking on higher default risk?
unemployment rate
Ex Post
How Financial Markets directly improve the well-being of consumers
Higher Returns
49. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period
Discount (zero coupon) Bond
indirect impact
Simple Loan
Velocity
50. Lower excess supply and lower price will fall and interest rates will rise
function of financial markets
Bd < Bs
Real Interest Rate
Interest rate