SUBJECTS
|
BROWSE
|
CAREER CENTER
|
POPULAR
|
JOIN
|
LOGIN
Business Skills
|
Soft Skills
|
Basic Literacy
|
Certifications
About
|
Help
|
Privacy
|
Terms
|
Email
Search
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. Precious Metals or another valueable commodity
direct impact
Upward Slops
Commodity Money
Long-run Movements
2. Less than one year and service current liquidity needs
Short-Term Maturity
monetary policy
Slope upward
Income
3. Nominal interest rate is not adjusted for inflation.
Interest rate
Corporate Bonds
Term Structure
Yield on a Discount Basis
4. 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.
The Expectation Approach
Interest rate
Corporate Bonds
inflation
5. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
Evolution of the Payment System
The Liquidity Premium Modification
bond market (money markets)
Eurocurrency Market
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.
bond market (money markets)
Price-level effect
The Expectation Approach
Present Discount Value
7. 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
Corporate Bonds
hyperinflation
Long-run Movements
8. The percent of available labor force unemployed
Risk
Interest rate
Eurocurrency Market
unemployment rate
9. Excess liquidity is spent on goods and services
direct impact
central bank
Upward Slops
Fisher Effect
10. Lower transaction costs - reduce risk - asymmetric information.
increases in money supply causes
financial markets
Store of Value
Function of Financial Intermediaries
11. The relationship between yield and maturity is...
Ex Ante
Not constant
Downward Slopes
Velocity
12. Lower the equilibrium price and interest rate.
Humped Yield Curves
Eurocurrency Market
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Bd = Bs
13. 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.
Eurocurrency
T-Bills
Price vs Yields to Maturity
Unit of Account
14. Small depository institutions report infrequently and adjustments must be made for seasonal variations
OTC
Why Revisions are issued to money data
Present Discount Value
unemployment rate
15. Determines interest rates
interest rate
Downward Slopes
How do regulations ensure the soundness of Financial Intermediaries?
bond market (money markets)
16. If the short-term interest rates are high than the yield curve slopes?
Tnotes
Downward
Federal Funds Market
Real world obervations
17. Many lead to more employment and output
How do regulations ensure the soundness of Financial Intermediaries?
Capital Markets
The Liquidity Premium Modification
increasing money supply
18. 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.
Long-run Movements
Certificate of Deposit
financial markets/institutions
Discount (zero coupon) Bond
19. The return expected over the next period on one asset relative to the alternative asset.
Expected Return
Banker's Acceptance
Term structure theory
Price vs Yields to Maturity
20. Periods of declining aggregate output - unemployment high - investment is low.
Eurocurrency Market
Medium of Exchange
Velocity
recession
21. Cost of borrowing money - expressed as a percentage of the amount borrowed per year.
Bd = Bs
who determines our money supply
interest rate
Eurocurrency
22. Yields similar for all maturities
Slope upward
Store of Value
business cycle
Flat yield curves
23. No interest- rate risk
24. The degree of uncertainty associated with the return on one asset relative to alternative assets.
Risk
T-Bills
Medium of Exchange
Repo
25. Principal plus interest paid to lender at given maturity date
T-Bonds
Eurocurrency
Simple Loan
Bd > Bs
26. 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 Liquidity Premium Modification
increases in money supply causes
T-Bills
How do regulations ensure the soundness of Financial Intermediaries?
27. 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.
The Liquidity Premium Modification
Fixed Payment-Loan
central bank
Flat yield curves
28. Used to save purchasing power; most liquid of all assets but loses value during inflation
Simple Loan
The Preferred Habitat Approach
The Liquidity Premium Modification
Store of Value
29. 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)
Price vs Yields to Maturity
Simple Loan
central bank
Keynesian Model
30. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits
M1
T-Notes
T-Bills
Use present value calculations
31. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
indirect impact
Ex Ante
Income effect
Flat yield curves
32. 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.
Supply and Demand for Bonds
Higher Returns
financial markets/institutions
OTC
33. Investors are concerned about the after tax return on bonds
Tbonds
tax structure
How Financial Markets promote economic efficiency
Real world obervations
34. 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.
The Preferred Habitat Approach
Price-level effect
Repo
Regulations increase information available to investors which does what?
35. A share of ownership in a corporation
Downward Slopes
Expected Return
financial markets/institutions
common stock
36. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
Function of Financial Intermediaries
Expected Return
monetary policy
Fisher Effect
37. If short-term interest rates are low than the yield curve slopes...
Risk
Upward
tax structure
monetary policy
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
Income
Bd < Bs
Real world obervations
hyperinflation
39. Financial instruments whose return is based on the underlying returns on mortgage loans.
financial markets/institutions
Wealth
Velocity
Mortgage-Backed Securities
40. Crucial role in creation of money
Why Revisions are issued to money data
bond
banks and money supply
Real Interest Rate
41. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Slope upward
monetary policy
Eurocurrency
Medium of Exchange
42. Instrumental in moving funds between countries
When real rate is high
foreign exchange market
Simple Loan
Long-run Movements
43. Bond denominated in a currency other than that of the country in which it is sold.
Eurobond
Wealth
common stock
foreign exchange market
44. Held ten years or more. They pay semiannual dividends and return of principal at maturity.
Price-level effect
Discount (zero coupon) Bond
T-Bonds
Real Interest Rate
45. Used to measure value in the economy
Interest rate
Why returns are more volatile for Long-Term bonds
Unit of Account
central bank
46. More than 10 year maturities
How Financial Markets promote economic efficiency
financial markets
Long-Term Maturities (Bond Market)
Money Market
47. 30 year maturities but not since 2001
increases in money supply causes
Tbonds
monetary policy
increasing money supply
48. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
financial markets
role of money
Tnotes
Yield to Maturity for simple loans
49. Most Common
foreign exchange market
Eurocurrency
Yield on a Discount Basis
Upward Slops
50. Greater incentive to borrow and less to lend.
When real rate is low
Tbonds
financial markets/institutions
Expected Return