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






2. Excess liquidity is spent on goods and services






3. How interest rates on bonds of different maturities move over time






4. One to Ten year maturities which fund long-term capital investments






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






6. 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.






7. 2 -5 -10 year maturities






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






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






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






11. 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






12. Held for one- ten years.






13. 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)






14. Flow of earnings per unit of time






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






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






17. Rare






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






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






20. Influence on business cycle - inflation - interest rates






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






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






23. Yield curves most always...






24. 30 year maturities but not since 2001






25. 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.






26. Determines interest rates






27. A share of ownership in a corporation






28. No interest- rate risk

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






30. Used to measure value in the economy






31. Bought at price below face value and face value repaid at maturity






32. Comparing payoffs at different points in time






33. 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






34. 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.






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






36. 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.






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






38. They have a higher interest-rate risk.






39. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.






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






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






42. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






43. Paper currency - has no real value






44. Lower the equilibrium price and interest rate.






45. Intermediate Yields are highest






46. 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.






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






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






49. 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.






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