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. Many lead to more employment and output






2. 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.






3. Excess liquidity is spent on goods and services






4. Paper currency - has no real value






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






6. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending






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






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






9. The upward and downward movement of aggregate output produced in the economy.






10. Rare






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






12. Bringing together of buyers and sellers of financial securities to establish prices; includes banks - savings and loans - credit unions - investment banks - and brokers - mutual funds - and bond markets.






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.






14. Promotes economic efficiency by minimizing the time spent in exchanging goods and services






15. At lower prices (higher i) - ceteris paribus - the quantity demanded of bonds is higher- an inverse relationship ' ' the quantity supplied of bonds is lower- a positive relationship.






16. 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.






17. Medium of exchange; unit of account; store of value; increases the liquidity in the economy






18. Used to save purchasing power; most liquid of all assets but loses value during inflation






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






20. Investors are concerned about the after tax return on bonds






21. Short-Term Debt Instruments






22. Higher default risk compared to municipal Bonds






23. A higher level of income causes the demand for money at each interest rate to increase and the demand curve to shift to the right.






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






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






26. Lower the equilibrium price and interest rate.






27. Flow of earnings per unit of time






28. Held ten years or more. They pay semiannual dividends and return of principal at maturity.






29. Praises rising at a fast and furious pace






30. Influence on business cycle - inflation - interest rates






31. 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.






32. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






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






34. Intermediate Yields are highest






35. Yields similar for all maturities






36. Supply and demand concept for different maturities will establish the specific rates for each maturity range. Changes in supply and demand can cause the rates to get out of line with expectations. However investors will drop preferred habitat if rate






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






38. They have a higher interest-rate risk.






39. Instrumental in moving funds between countries






40. Banks borrow from and lend to each other deposits they hold at the Fed. These are very short term and usually only held over night.






41. Determines interest rates






42. It will shift it to the right.






43. 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.






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






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






46. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.






47. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept






48. Comparing payoffs at different points in time






49. 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.






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