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






2. 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.






3. Used to measure value in the economy






4. 30 year maturities but not since 2001






5. What will investors expect for taking on higher default risk?






6. More than 10 year maturities






7. Crucial role in creation of money






8. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period






9. 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






10. Lower the equilibrium price and interest rate.






11. Does not deal directly with the public and responsible for executing of the national monetary policy; implements policy by altering money supply and influencing bank behavior.






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






13. Instrumental in moving funds between countries






14. 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.






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






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






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






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






19. 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.






20. Reduces adverse selection - moral hazard - and insider trading.






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






22. They have a higher interest-rate risk.






23. Held for one- ten years.






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






25. 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.






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






27. They channel funds from savers to investors - thereby promoting economic efficiency






28. Comparing payoffs at different points in time






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






30. 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.






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






32. Yields similar for all maturities






33. Intermediate Yields are highest






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






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






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






37. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One






38. Long-Term Debt and Equity Instruments






39. 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.






40. Lower transaction costs - reduce risk - asymmetric information.






41. A share of ownership in a corporation






42. 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






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






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






45. Allowing consumers to time their purchases better.






46. The percent of available labor force unemployed






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






48. Rare






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






50. No interest- rate risk

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