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






2. Short-Term Debt Instruments






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






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






5. 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.






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






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






8. Long-Term Debt and Equity Instruments






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






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






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






12. Flow of earnings per unit of time






13. 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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14. 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.






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






16. 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.






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






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






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






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






21. Less than one year and service current liquidity needs






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






23. 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.






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






25. Rare






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






27. Paper currency - has no real value






28. The central bank






29. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






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






31. More than 10 year maturities






32. Yields similar for all maturities






33. 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






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






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






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






37. Excess liquidity is spent on goods and services






38. Used to measure value in the economy






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






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






41. 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






42. 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.






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






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






45. No interest- rate risk

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






47. 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.






48. 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.






49. 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.






50. Instrumental in moving funds between countries