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






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






3. Intermediate Yields are highest






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






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






6. Influence on business cycle - inflation - interest rates






7. Greater incentive to borrow and less to lend.






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






9. 30 year maturities but not since 2001






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






11. Crucial role in creation of money






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






13. Used to measure value in the economy






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 higher the default risk means the yield curve...






16. 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.






17. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.






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






19. Yields similar for all maturities






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






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






22. Short-Term Debt Instruments






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






24. It will shift it to the right.






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






26. 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.






27. Held for one- ten years.






28. They have a higher interest-rate risk.






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






30. 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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31. 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.






32. Praises rising at a fast and furious pace






33. Lower the equilibrium price and interest rate.






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






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






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






37. 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.






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






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






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






41. 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.






42. Yield curves most always...






43. The interest rate at which private depository institutions lend balances to other depository institutions usually over night






44. 2 -5 -10 year maturities






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






46. The degree of uncertainty associated with the return on one asset relative to alternative assets.






47. Foreign currencies deposited in banks outside the home country.






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






49. No interest- rate risk

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