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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. 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.






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






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






5. They have a higher interest-rate risk.






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






7. Lower excess demand and lower price will rise and interest rates will fall






8. Rare






9. The higher the default risk means the yield curve...






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






11. No interest- rate risk

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12. Praises rising at a fast and furious pace






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






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






15. Short-Term Debt Instruments






16. Comparing payoffs at different points in time






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






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






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






20. A share of ownership in a corporation






21. Nominal interest rate is not adjusted for inflation.






22. 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.






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






24. 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.






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






26. 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






27. Used to measure value in the economy






28. Determines interest rates






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






30. 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






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






32. Instrumental in moving funds between countries






33. 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.






34. Precious Metals or another valueable commodity






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






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






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






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






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






40. Many lead to more employment and output






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






42. 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.






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






44. More than 10 year maturities






45. 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.






46. Most Common






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






48. Investors are concerned about the after tax return on bonds






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






50. Greater incentive to borrow and less to lend.







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