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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. 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.






2. Yield curves most always...






3. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






4. 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.






5. 2 -5 -10 year maturities






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






7. Yields similar for all maturities






8. Influence on business cycle - inflation - interest rates






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






10. Less than one year and service current liquidity needs






11. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending






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






13. 30 year maturities but not since 2001






14. Most Common






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






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






17. Long-Term Debt and Equity Instruments






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






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






20. They have a higher interest-rate risk.






21. 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.






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






23. Intermediate Yields are highest






24. Crucial role in creation of money






25. Precious Metals or another valueable commodity






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






27. Allowing consumers to time their purchases better.






28. 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.






29. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.






30. Excess liquidity is spent on goods and services






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






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






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






34. 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.






35. Held for one- ten years.






36. 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






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






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






39. Many lead to more employment and output






40. Short-Term Debt Instruments






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






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






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






44. Alters publics liquidity and influences spending through portfolio adjustment






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






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






47. Used to measure value in the economy






48. Comparing payoffs at different points in time






49. 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.






50. A debt security that promises to make payments periodically for a specified period of time.