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Test your basic knowledge |
DSST Money And Banking
Start Test
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Subjects
:
dss
,
bankingt
Instructions:
Answer 50 questions in 15 minutes.
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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. Sold in a foreign country and denominated in that country's currency.
Price-level effect
Foreign Bonds
Eurobond
T-Bonds
2. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
central bank
Foreign Bonds
Evolution of the Payment System
Simple Loan
3. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.
Eurocurrency Market
Kind of risk for a bond that's maturity equals the holding period
Risk
Yield on a Discount Basis
4. Yield to maturity; a measure of an interternporal price
Unit of Account
Banker's Acceptance
Interest rate
Mortgage-Backed Securities
5. The central bank
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Commodity Money
Mortgage-Backed Securities
who determines our money supply
6. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
The Preferred Habitat Approach
hyperinflation
Money (money supply)
Upward Slops
7. Small depository institutions report infrequently and adjustments must be made for seasonal variations
Corporate Bond Default risk
Why Revisions are issued to money data
Function of Financial Intermediaries
Tbonds
8. Used to save purchasing power; most liquid of all assets but loses value during inflation
Store of Value
increasing money supply
M1
common stock
9. 4 -13 -26 -52 week maturities. Sold at zero coupon rates
When real rate is high
Regulations increase information available to investors which does what?
Foreign Bonds
T-Bills
10. Nominal interest rate is not adjusted for inflation.
Bd > Bs
Yield to Maturity for simple loans
Income
Interest rate
11. A dollar paid to you one year from now is less valueable than a dollar paid to you today
Income
Downward
The Expectation Approach
Present Discount Value
12. Determines interest rates
How do regulations ensure the soundness of Financial Intermediaries?
bond market (money markets)
Downward
hyperinflation
13. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
function of financial markets
Downward
The Liquidity Premium Modification
Together
14. The return expected over the next period on one asset relative to the alternative asset.
Eurocurrency Market
T-Bills
Expected Return
role of money
15. The percent of available labor force unemployed
unemployment rate
Bd > Bs
inflation
Interest rate
16. The relationship between yield and maturity is...
Not constant
Present Discount Value
Banker's Acceptance
Ex Ante
17. 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)
T-Bills
Corporate Bonds
Bd < Bs
Keynesian Model
18. Used to measure value in the economy
Unit of Account
Together
Term structure theory
Capital Markets
19. Allowing consumers to time their purchases better.
increasing money supply
How Financial Markets directly improve the well-being of consumers
business cycle
Yield to Maturity for simple loans
20. The degree of uncertainty associated with the return on one asset relative to alternative assets.
Forms of Commercial Papers
Risk
common stock
Income effect
21. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
bond
T-Notes
Medium of Exchange
Bd = Bs
22. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.
How do regulations ensure the soundness of Financial Intermediaries?
Bd > Bs
bond market (money markets)
Eurobond
23. Instrumental in moving funds between countries
Term structure theory
foreign exchange market
Long-Term Maturities (Bond Market)
Bd > Bs
24. Reduces adverse selection - moral hazard - and insider trading.
Evolution of the Payment System
Price-level effect
Regulations increase information available to investors which does what?
role of money
25. 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.
Corporate Bonds
Present Discount Value
unemployment rate
Fiat Money
26. Lower excess demand and lower price will rise and interest rates will fall
Upward
Bd > Bs
Income effect
Tbonds
27. Cost of borrowing money - expressed as a percentage of the amount borrowed per year.
interest rate
who determines our money supply
Simple Loan
Use present value calculations
28. Higher default risk compared to municipal Bonds
Corporate Bond Default risk
Eurocurrency
increasing money supply
Price-level effect
29. 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.
who determines our money supply
The Expectation Approach
business cycle
Together
30. 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.
Price vs Yields to Maturity
Bd < Bs
recession
Simple Loan
31. Relationship among yields of different maturities of hte same type of security.
Store of Value
Slope upward
Present Discount Value
Term Structure
32. Precious Metals or another valueable commodity
Commodity Money
Yield on a Discount Basis
Together
federal funds rate
33. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.
Coupon Bond
Yield on a Discount Basis
Evolution of the Payment System
Bd < Bs
34. 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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35. Long-Term Debt and Equity Instruments
Velocity
Capital Markets
Price vs Yields to Maturity
Humped Yield Curves
36. 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
Interest rate
interest rate
Term structure theory
Real Interest Rate
37. Influence on business cycle - inflation - interest rates
monetary policy
direct impact
Commodity Money
T-Bonds
38. Pays owner of bond a fixed payment - until maturity when it pays off face par value
Income effect
common stock
Coupon Bond
inflation
39. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.
bond
Real Interest Rate
increasing money supply
unemployment rate
40. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
The Preferred Habitat Approach
Income
role of money
function of financial markets
41. 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.
financial markets/institutions
Income
indirect impact
The Liquidity Premium Modification
42. Less than one year and service current liquidity needs
Short-Term Maturity
Yield Curve
Bd > Bs
Flat yield curves
43. Praises rising at a fast and furious pace
Coupon Bond
Kind of risk for a bond that's maturity equals the holding period
OTC
hyperinflation
44. Periods of declining aggregate output - unemployment high - investment is low.
recession
increasing money supply
unemployment rate
Tbonds
45. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.
Present Discount Value
Upward
bond market (money markets)
Yield Curve
46. The total collection of pieces of property that serve to store value
Together
Supply and Demand for Bonds
Price vs Yields to Maturity
Wealth
47. Yield curves most always...
Function of Financial Intermediaries
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Banker's Acceptance
Slope upward
48. What will investors expect for taking on higher default risk?
Higher Returns
Fixed Payment-Loan
Fiat Money
Term Structure
49. Rare
Downward Slopes
role of money
Term Structure
indirect impact
50. Investors are concerned about the after tax return on bonds
Expected Return
tax structure
T-Bills
Real world obervations
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