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






2. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.






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






4. 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.






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






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






8. The total collection of pieces of property that serve to store value






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






10. Small depository institutions report infrequently and adjustments must be made for seasonal variations






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






12. 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.






13. Precious Metals or another valueable commodity






14. Rare






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






16. Higher default risk compared to municipal Bonds






17. Yield to maturity; a measure of an interternporal price






18. Lower the equilibrium price and interest rate.






19. Comparing payoffs at different points in time






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






21. 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.






22. 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.






23. Sold in a foreign country and denominated in that country's currency.






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






25. Yields similar for all maturities






26. 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)






27. 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.






28. 30 year maturities but not since 2001






29. A share of ownership in a corporation






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






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






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






33. Alters publics liquidity and influences spending through portfolio adjustment






34. Influence on business cycle - inflation - interest rates






35. The percent of available labor force unemployed






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






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






38. Lower excess supply and lower price will fall and interest rates will rise






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






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






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






42. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money






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






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






45. 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






46. Greater incentive to borrow and less to lend.






47. Long-Term Debt and Equity Instruments






48. 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.






49. Excess liquidity is spent on goods and services






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