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. Periods of declining aggregate output - unemployment high - investment is low.






2. Higher default risk compared to municipal Bonds






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






4. The percent of available labor force unemployed






5. Crucial role in creation of money






6. Foreign currencies deposited in banks outside the home country.






7. 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.






8. Bought at price below face value and face value repaid at maturity






9. A debt security that promises to make payments periodically for a specified period of time.






10. Paper currency - has no real value






11. 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.






12. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.






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






14. Alters publics liquidity and influences spending through portfolio adjustment






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






16. 2 -5 -10 year maturities






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






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






20. The increase in the price of set goods and services in a given economy over a period of time - the percent change.






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






22. Influence on business cycle - inflation - interest rates






23. Flow of earnings per unit of time






24. 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.






25. Intermediate Yields are highest






26. Most Common






27. Many lead to more employment and output






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






29. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.






30. 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






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






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






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






34. Rare






35. 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.






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






37. Excess liquidity is spent on goods and services






38. 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.






39. No interest- rate risk

Warning: Invalid argument supplied for foreach() in /var/www/html/basicversity.com/show_quiz.php on line 183


40. A share of ownership in a corporation






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






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






43. The central bank






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






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






46. The return expected over the next period on one asset relative to the alternative asset.






47. 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






48. 30 year maturities but not since 2001






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






50. 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)