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DSST Money And Banking

Subjects : dss, bankingt
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. 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.






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






3. Many lead to more employment and output






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






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






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






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






8. Medium of exchange; unit of account; store of value; increases the liquidity in the economy






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






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






11. 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.






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






13. 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.






14. Paper currency - has no real value






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






16. It will shift it to the right.






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






18. 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






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






20. 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






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






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






23. 2 -5 -10 year maturities






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






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






26. 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






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






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






29. Rare






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






31. Influence on business cycle - inflation - interest rates






32. 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.






33. 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.






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






35. 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.






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






37. Determines interest rates






38. Negotiable in secondary market and can also be resold in the secondary market. Minimum purchase of $100 -000 but the minimum in the secondary market is $2 -000 -000.






39. Less than one year and service current liquidity needs






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






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






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






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






44. Praises rising at a fast and furious pace






45. Allowing consumers to time their purchases better.






46. 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.






47. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.






48. Alters publics liquidity and influences spending through portfolio adjustment






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






50. 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.







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