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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. Held for one- ten years.






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






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






4. Short-Term Debt Instruments






5. Greater incentive to borrow and less to lend.






6. Excess liquidity is spent on goods and services






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






8. 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.






9. More than 10 year maturities






10. Seller will buy back the asset at a later date and typically at a higher price. These securities are usually government securities and are used by banks and Large Corporations.






11. 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)






12. 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.






13. If short-term interest rates are low than the yield curve slopes...






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






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






16. The percent of available labor force unemployed






17. Praises rising at a fast and furious pace






18. Allowing consumers to time their purchases better.






19. Used to measure value in the economy






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






21. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






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






23. 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.






24. Lower the equilibrium price and interest rate.






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






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






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






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






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






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






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






32. Most Common






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






34. Determines interest rates






35. Many lead to more employment and output






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






37. Paper currency - has no real value






38. 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.






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






40. Relationship among yields of different maturities of hte same type of security.






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






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






43. Influence on business cycle - inflation - interest rates






44. 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.






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






46. Yield curves most always...






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






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






49. 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.






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







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