Certain business programs require upper-level credits in banking. But what if you already understand international banking and monetary policies? If this describes you, the DSST Money and Banking exam can help you earn college credit for the banking knowledge you already have.
DSST is a prior learning assessment program. This means that students take an exam on something they already understand and receive college credit on their transcripts if they pass the exam. DSST is a good way to graduate faster, move on to the business courses you really want to take, and spend less money on your college education.
- The Role and Kinds of Money
- Commercial Banks and Other Financial Intermediaries
- Central Banking and the Federal Reserve System
- Money and Macroeconomic Activity
- Monetary Policy in the United States
- The International Monetary System.
A high percentage of questions on the exam focus on commercial banks and central banking.
One of the best ways to study for the DSST Money and Banking exam is to check out a DSST study guide, which will offer a detailed outline of the exam topics, sample questions, and a list of books for reference.
Before you register for the DSST Money and Banking exam you should verify that your college or university accepts DSST for credit. You might also want to meet with your academic advisor to confirm that the DSST Money and Banking exam will meet your academic needs.
DSST Money and Banking Practice Questions
The DSST Money and Banking exam covers these topics:
1. The single most important defining characteristic of money is:
A. That it is a commodity
B. That it be issued in various denominations
C. That it be fungible
D. That it be acceptable by parties in trade
2. Which of the following statements is FALSE with regard to “fiat money”?
A. Fiat money is used in the U.S. instead of gold- or silver-backed currency
B. Fiat money is essentially a promise and guarantee of value by a bona fide government
C. Fiat money is pegged to and can be exchanged for either gold or silver
D. Fiat money allows governments to more easily control the money supply
3. A certificate that obligates the exchange of a specific weight of silver is an example of:
A. Commodity money
B. Representative money
C. Fiat money
D. Paper money
4. Aside from being a medium of exchange, money is often said to be a “unit of account.” This means:
A. That money can be used as a measurement of the value and cost of ownership or operation
B. That the value of money is determined by the things it can buy
C. That money is denominated into various sectional units representing different values
D. That the value of a unit of money expands or contracts according to the general economy
5. Which of the following types of financial instruments is NOT a time deposit?
A. A one-month CD guaranteeing an annual interest rate of 1.5 percent
B. A certificate of deposit with a fixed maturity date that can only be withdrawn by the owner serving written notice
C. A demand deposit in which no withdrawal activity is recorded for three months
D. A Foreign Currency Fixed Deposit (or FCFD)
6. The best description of risk management at a commercial bank is that:
A. A commercial bank manages risk by employing risk management executives who decide which loans and investments stand the best chance of earning profit
B. A commercial bank manages risk by charging a higher rate of interest for loans than it pays out to depositors
C. A commercial bank manages risk by using money from time deposits to invest in mutual funds, hedge funds, and sovereign funds
D. A commercial bank forestalls loan and investment risk by maintaining an appropriate and regulated reserve ratio
7. The interbank loan rate is set by the:
A. Federal Reserve Bank
B. Securities and Exchange Commission
C. State in which the bank is licensed
8. The Treasury Department’s Office of the Controller of the Currency is important because:
A. It licenses and regulates national banks to ensure that they meet Treasury reserve, insurance, and operational requirements
B. It provides cash reserves to savings and loans in order to fund the purchase and sale of Treasury bills and bonds
C. It sets the interbank loan rate
D. It loans currency to member banks and S&Ls so that they make lending possible for small businesses
9. Interbank loans at the federal funds rate are typically made when:
A. The interest rate on long-term home mortgages is higher than the federal funds rate
B. A bank’s reserve levels have fallen below Federal Reserve requirements to the degree that the bank needs to earn more profits to build them up again
C. A bank builds up cash reserves in excess of the Federal Reserve requirements and gains additional revenues by lending it out
D. A bank goes to the regional Federal Reserve Bank for a bailout
10. One of the chief reasons that the Federal Reserve sets the federal funds rate lower than the rate for commercial lending is because:
A. Federal Reserve management wishes to stimulate lending for housing and other purposes while stabilizing the loan experience of commercial and individual borrowers
B. The Federal Reserve wishes to stimulate the economy by making money available to borrowers
C. A higher federal funds rate would slow the economy
D. All of the above