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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. Investors are concerned about the after tax return on bonds
tax structure
role of money
Forms of Commercial Papers
direct impact
2. Lower excess demand and lower price will rise and interest rates will fall
Mortgage-Backed Securities
Corporate Bond Default risk
Ex Ante
Bd > Bs
3. Lower the equilibrium price and interest rate.
Present Discount Value
Tnotes
Supply and Demand for Bonds
Bd = Bs
4. One to Ten year maturities which fund long-term capital investments
Corporate Bonds
How do regulations ensure the soundness of Financial Intermediaries?
financial markets/institutions
Intermediate-term Maturity (Capital Market)
5. They channel funds from savers to investors - thereby promoting economic efficiency
The Preferred Habitat Approach
inflation
financial markets
Short-Term Maturity
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.
Price-level effect
Yield Curve
Coupon Bond
T-Notes
7. 30 year maturities but not since 2001
Evolution of the Payment System
inflation
When real rate is high
Tbonds
8. Paper currency - has no real value
Ex Post
Fiat Money
Wealth
OTC
9. Short-Term Debt Instruments
Money Market
Present Discount Value
Evolution of the Payment System
indirect impact
10. Real interest rate: the real interest rate actually realized.
Commodity Money
Downward
Kind of risk for a bond that's maturity equals the holding period
Ex Post
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.
central bank
hyperinflation
OTC
Real Interest Rate
12. Nominal interest rate is not adjusted for inflation.
direct impact
Upward Slops
Bd > Bs
Interest rate
13. Cost of borrowing money - expressed as a percentage of the amount borrowed per year.
Yield on a Discount Basis
The Expectation Approach
interest rate
The Preferred Habitat Approach
14. Crucial role in creation of money
Term structure theory
increases in money supply causes
banks and money supply
Simple Loan
15. If the short-term interest rates are high than the yield curve slopes?
Yield Curve
bond market (money markets)
common stock
Downward
16. Rare
monetary policy
Downward Slopes
When real rate is low
Certificate of Deposit
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
How do regulations ensure the soundness of Financial Intermediaries?
indirect impact
When real rate is high
Term structure theory
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.
T-Bills
Store of Value
banks and money supply
The Expectation Approach
19. Interest rate that equates today's value with present value of all future payments.
Yield to Maturity for simple loans
role of money
Intermediate-term Maturity (Capital Market)
The Expectation Approach
20. The degree of uncertainty associated with the return on one asset relative to alternative assets.
Risk
indirect impact
Evolution of the Payment System
The Liquidity Premium Modification
21. Reduces adverse selection - moral hazard - and insider trading.
monetary policy
Regulations increase information available to investors which does what?
Capital Markets
Simple Loan
22. Principal plus interest paid to lender at given maturity date
Bd = Bs
Simple Loan
Intermediate-term Maturity (Capital Market)
Coupon Bond
23. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Fisher Effect
Long-Term Maturities (Bond Market)
monetary policy
Ex Ante
24. Less than one year and service current liquidity needs
Short-Term Maturity
Capital Markets
How do regulations ensure the soundness of Financial Intermediaries?
When real rate is high
25. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.
foreign exchange market
Yield on a Discount Basis
Capital Markets
Medium of Exchange
26. 2 -5 -10 year maturities
Tnotes
Hs a greater upward shift
Mortgage-Backed Securities
financial markets/institutions
27. What kind of movements should we pay attention to in money supply numbers?
recession
Commodity Money
Long-run Movements
Yield on a Discount Basis
28. A dollar paid to you one year from now is less valueable than a dollar paid to you today
Present Discount Value
easily standardized - widely accepted - divisible and not deteriorate quickly
Unit of Account
When real rate is high
29. Excess liquidity is spent on goods and services
The Liquidity Premium Modification
direct impact
Capital Markets
Expected Return
30. Alters publics liquidity and influences spending through portfolio adjustment
Use present value calculations
increases in money supply causes
Function of Financial Intermediaries
The Liquidity Premium Modification
31. The interest rate at which private depository institutions lend balances to other depository institutions usually over night
federal funds rate
When real rate is low
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Money (money supply)
32. Most Common
Simple Loan
Foreign Bonds
Capital Markets
Upward Slops
33. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
Certificate of Deposit
federal funds rate
tax structure
Yield Curve
34. Instrumental in moving funds between countries
Commodity Money
increases in money supply causes
foreign exchange market
unemployment rate
35. The higher the default risk means the yield curve...
Hs a greater upward shift
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Unit of Account
recession
36. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
How Financial Markets directly improve the well-being of consumers
OTC
Present Discount Value
Fisher Effect
37. Pays owner of bond a fixed payment - until maturity when it pays off face par value
Short-Term Maturity
How Financial Markets directly improve the well-being of consumers
Coupon Bond
T-Notes
38. The central bank
Bd = Bs
who determines our money supply
How do regulations ensure the soundness of Financial Intermediaries?
Wealth
39. Greater incentive to borrow and less to lend.
Velocity
Humped Yield Curves
When real rate is low
inflation
40. Higher default risk compared to municipal Bonds
Corporate Bond Default risk
indirect impact
Intermediate-term Maturity (Capital Market)
Long-Term Maturities (Bond Market)
41. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
T-Bonds
The Preferred Habitat Approach
How do regulations ensure the soundness of Financial Intermediaries?
Short-Term Maturity
42. What will investors expect for taking on higher default risk?
Tnotes
Together
Tbonds
Higher Returns
43. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
Humped Yield Curves
T-Bills
Ex Ante
Fixed Payment-Loan
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.
T-Bills
Function of Financial Intermediaries
The Preferred Habitat Approach
Together
45. Take the form of promissory notes - drafts - checks - and CDs
T-Notes
Forms of Commercial Papers
direct impact
Commodity Money
46. Producing an efficient allocation of capital - which increases production
How Financial Markets promote economic efficiency
bond market (money markets)
Interest rate
easily standardized - widely accepted - divisible and not deteriorate quickly
47. Currency + Traveler's Checks+ Demand Deposits + Other checkable deposits
Why Revisions are issued to money data
M1
The Liquidity Premium Modification
business cycle
48. Allowing consumers to time their purchases better.
Money (money supply)
How Financial Markets directly improve the well-being of consumers
Fixed Payment-Loan
When real rate is high
49. Lower Incentive to borrow but a greater incentive to lend.
When real rate is high
common stock
Simple Loan
Foreign Bonds
50. The relationship between yield and maturity is...
banks and money supply
Not constant
Banker's Acceptance
Capital Markets