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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. Precious Metals or another valueable commodity






3. Nominal interest rate is not adjusted for inflation.






4. Held ten years or more. They pay semiannual dividends and return of principal at maturity.






5. Held for one- ten years.






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






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






8. Intermediate Yields are highest






9. 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)






10. Most Common






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






12. Allowing consumers to time their purchases better.






13. 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.






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






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






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






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






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






19. A share of ownership in a corporation






20. A bank loan typically used by a company to finance storage or shipment of goods. This bank draft is like a check - and guarantees future payment. These securities are active in the Secondary Market

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






22. Lower the equilibrium price and interest rate.






23. No interest- rate risk

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24. Influence on business cycle - inflation - interest rates






25. 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.






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






27. They have a higher interest-rate risk.






28. 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.






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






30. Instrumental in moving funds between countries






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






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






33. Alters publics liquidity and influences spending through portfolio adjustment






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






35. 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






36. Short-Term Debt Instruments






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






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






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






40. 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






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






42. Yield curves most always...






43. Praises rising at a fast and furious pace






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






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






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






47. 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.






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






49. Rare






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