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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. Alters publics liquidity and influences spending through portfolio adjustment
Commodity Money
increases in money supply causes
Fixed Payment-Loan
Ex Ante
2. Used to save purchasing power; most liquid of all assets but loses value during inflation
Downward
Store of Value
increases in money supply causes
Mortgage-Backed Securities
3. 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.
Store of Value
T-Bills
Money (money supply)
Ex Post
4. Used to measure value in the economy
increases in money supply causes
Unit of Account
common stock
banks and money supply
5. A share of ownership in a corporation
Intermediate-term Maturity (Capital Market)
common stock
Interest rate
Store of Value
6. Small depository institutions report infrequently and adjustments must be made for seasonal variations
How Financial Markets directly improve the well-being of consumers
Why Revisions are issued to money data
Fisher Effect
Tnotes
7. Bought at price below face value and face value repaid at maturity
Evolution of the Payment System
Discount (zero coupon) Bond
Simple Loan
T-Notes
8. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
Evolution of the Payment System
Eurocurrency
business cycle
Tbonds
9. For a commodity to function efficiently as money it must be...
Discount (zero coupon) Bond
How Financial Markets directly improve the well-being of consumers
Corporate Bonds
easily standardized - widely accepted - divisible and not deteriorate quickly
10. Most Common
When real rate is low
indirect impact
Upward Slops
Eurobond
11. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
financial markets/institutions
Fiat Money
Fixed Payment-Loan
indirect impact
12. Sold in a foreign country and denominated in that country's currency.
tax structure
Banker's Acceptance
Foreign Bonds
Real Interest Rate
13. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period
Corporate Bond Default risk
Commodity Money
Velocity
Use present value calculations
14. A debt security that promises to make payments periodically for a specified period of time.
Unit of Account
Repo
bond
Real Interest Rate
15. A higher level of income causes the demand for money at each interest rate to increase and the demand curve to shift to the right.
Income effect
Banker's Acceptance
inflation
increasing money supply
16. Paper currency - has no real value
Mortgage-Backed Securities
Fiat Money
The Preferred Habitat Approach
Why Revisions are issued to money data
17. Intermediate Yields are highest
Flat yield curves
Interest rate
Money (money supply)
Humped Yield Curves
18. Lower transaction costs - reduce risk - asymmetric information.
Yield to Maturity for simple loans
unemployment rate
Real world obervations
Function of Financial Intermediaries
19. 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.
bond
Term structure theory
Price-level effect
who determines our money supply
20. Real interest rate: the real interest rate actually realized.
Ex Post
bond
Mortgage-Backed Securities
OTC
21. The higher the default risk means the yield curve...
Why returns are more volatile for Long-Term bonds
Hs a greater upward shift
Use present value calculations
Foreign Bonds
22. Yield to maturity; a measure of an interternporal price
Banker's Acceptance
Interest rate
Income
hyperinflation
23. 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
indirect impact
Real world obervations
Discount (zero coupon) Bond
Expected Return
24. The relationship between yield and maturity is...
Corporate Bonds
Fisher Effect
Not constant
Fixed Payment-Loan
25. Greater incentive to borrow and less to lend.
Ex Ante
Not constant
When real rate is low
Money Market
26. Excess liquidity is spent on goods and services
Coupon Bond
recession
Foreign Bonds
direct impact
27. Lower Incentive to borrow but a greater incentive to lend.
Keynesian Model
When real rate is high
Ex Ante
Yield Curve
28. What kind of movements should we pay attention to in money supply numbers?
When real rate is low
The Liquidity Premium Modification
How Financial Markets promote economic efficiency
Long-run Movements
29. 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.
Certificate of Deposit
Short-Term Maturity
The Preferred Habitat Approach
Kind of risk for a bond that's maturity equals the holding period
30. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
T-Bills
federal funds rate
inflation
Intermediate-term Maturity (Capital Market)
31. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
The Preferred Habitat Approach
Kind of risk for a bond that's maturity equals the holding period
T-Bonds
Why Revisions are issued to money data
32. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
Real Interest Rate
Flat yield curves
Slope upward
common stock
33. The total collection of pieces of property that serve to store value
increasing money supply
who determines our money supply
Price-level effect
Wealth
34. What will investors expect for taking on higher default risk?
Long-Term Maturities (Bond Market)
Use present value calculations
Term structure theory
Higher Returns
35. 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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36. Determines interest rates
Ex Post
bond market (money markets)
When real rate is high
Price vs Yields to Maturity
37. 30 year maturities but not since 2001
When real rate is high
Fixed Payment-Loan
federal funds rate
Tbonds
38. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
role of money
Yield Curve
unemployment rate
Tnotes
39. Influence on business cycle - inflation - interest rates
Ex Post
monetary policy
Fixed Payment-Loan
Fisher Effect
40. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Eurocurrency Market
Certificate of Deposit
When real rate is high
function of financial markets
41. The upward and downward movement of aggregate output produced in the economy.
Money Market
Real Interest Rate
financial markets/institutions
business cycle
42. Lower excess demand and lower price will rise and interest rates will fall
common stock
Yield on a Discount Basis
T-Notes
Bd > Bs
43. Bond denominated in a currency other than that of the country in which it is sold.
Downward
Eurobond
financial markets
Coupon Bond
44. Precious Metals or another valueable commodity
Money Market
Together
Commodity Money
Long-run Movements
45. 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.
Evolution of the Payment System
Money (money supply)
Coupon Bond
Supply and Demand for Bonds
46. Investors are concerned about the after tax return on bonds
Why Revisions are issued to money data
tax structure
Eurocurrency Market
Forms of Commercial Papers
47. It will shift it to the right.
OTC
How do regulations ensure the soundness of Financial Intermediaries?
recession
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
48. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time
Upward Slops
Corporate Bond Default risk
Fixed Payment-Loan
Discount (zero coupon) Bond
49. The degree of uncertainty associated with the return on one asset relative to alternative assets.
Humped Yield Curves
Foreign Bonds
Bd = Bs
Risk
50. 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.
The Liquidity Premium Modification
Short-Term Maturity
Fixed Payment-Loan
Slope upward