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






2. No interest- rate risk

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






4. Flow of earnings per unit of time






5. Paper currency - has no real value






6. 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






7. 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.






8. Crucial role in creation of money






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






10. The central bank






11. 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.






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






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






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






15. 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.






16. Rare






17. 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)






18. Many lead to more employment and output






19. Allowing consumers to time their purchases better.






20. Greater incentive to borrow and less to lend.






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






22. 30 year maturities but not since 2001






23. Comparing payoffs at different points in time






24. Alters publics liquidity and influences spending through portfolio adjustment






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






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






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






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






29. It will shift it to the right.






30. 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.






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






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






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






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






35. Less than one year and service current liquidity needs






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






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






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






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






40. 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.






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






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






43. They have a higher interest-rate risk.






44. Held for one- ten years.






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






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






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






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






49. 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.






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