Test your basic knowledge |

DSST Money And Banking

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. They have a higher interest-rate risk.






2. 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.






3. For a commodity to function efficiently as money it must be...






4. Sold in a foreign country and denominated in that country's currency.






5. Less than one year and service current liquidity needs






6. Yield curves most always...






7. Crucial role in creation of money






8. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits






9. Financial instruments whose return is based on the underlying returns on mortgage loans.






10. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time






11. Lower the equilibrium price and interest rate.






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.






13. Principal plus interest paid to lender at given maturity date






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.






15. Used to measure value in the economy






16. A dollar paid to you one year from now is less valueable than a dollar paid to you today






17. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.






18. The total collection of pieces of property that serve to store value






19. How interest rates on bonds of different maturities move over time






20. Rare






21. One to Ten year maturities which fund long-term capital investments






22. Pays owner of bond a fixed payment - until maturity when it pays off face par value






23. Reduces adverse selection - moral hazard - and insider trading.






24. Lower excess demand and lower price will rise and interest rates will fall






25. If the short-term interest rates are high than the yield curve slopes?






26. 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.






27. Many lead to more employment and output






28. Intermediate Yields are highest






29. Flow of earnings per unit of time






30. Bond denominated in a currency other than that of the country in which it is sold.






31. Most Common






32. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.






33. If short-term interest rates are low than the yield curve slopes...






34. 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.






35. Lower Incentive to borrow but a greater incentive to lend.






36. 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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37. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.






38. 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






39. 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.






40. 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.






41. 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.






42. The higher the default risk means the yield curve...






43. Determines interest rates






44. Small depository institutions report infrequently and adjustments must be made for seasonal variations






45. Held for one- ten years.






46. Investors are concerned about the after tax return on bonds






47. A share of ownership in a corporation






48. They channel funds from savers to investors - thereby promoting economic efficiency






49. Instrumental in moving funds between countries






50. The relationship between yield and maturity is...