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. Investors are concerned about the after tax return on bonds






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






3. Lower the equilibrium price and interest rate.






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






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






6. 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.






7. 30 year maturities but not since 2001






8. Paper currency - has no real value






9. Short-Term Debt Instruments






10. Real interest rate: the real interest rate actually realized.






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.






12. Nominal interest rate is not adjusted for inflation.






13. Cost of borrowing money - expressed as a percentage of the amount borrowed per year.






14. Crucial role in creation of money






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






16. Rare






17. 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






18. 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.






19. Interest rate that equates today's value with present value of all future payments.






20. The degree of uncertainty associated with the return on one asset relative to alternative assets.






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






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






23. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.






24. Less than one year and service current liquidity needs






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






26. 2 -5 -10 year maturities






27. What kind of movements should we pay attention to in money supply numbers?






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






29. Excess liquidity is spent on goods and services






30. Alters publics liquidity and influences spending through portfolio adjustment






31. The interest rate at which private depository institutions lend balances to other depository institutions usually over night






32. Most Common






33. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.






34. Instrumental in moving funds between countries






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






36. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One






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






38. The central bank






39. Greater incentive to borrow and less to lend.






40. Higher default risk compared to municipal Bonds






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






42. What will investors expect for taking on higher default risk?






43. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






44. 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.






45. Take the form of promissory notes - drafts - checks - and CDs






46. Producing an efficient allocation of capital - which increases production






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






48. Allowing consumers to time their purchases better.






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






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