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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. The percent of available labor force unemployed






2. 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.






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






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






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






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






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






8. 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.






9. No interest- rate risk

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10. The central bank






11. They have a higher interest-rate risk.






12. Comparing payoffs at different points in time






13. 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.






14. Held for one- ten years.






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






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






17. Flow of earnings per unit of time






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






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






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






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






22. 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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23. 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.






24. 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)






25. Crucial role in creation of money






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






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






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






29. Higher default risk compared to municipal Bonds






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






31. Short-Term Debt Instruments






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






33. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period






34. Lower the equilibrium price and interest rate.






35. Long-Term Debt and Equity Instruments






36. Rare






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






38. 2 -5 -10 year maturities






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






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






41. The total collection of pieces of property that serve to store value






42. 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.






43. Many lead to more employment and output






44. A share of ownership in a corporation






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






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






47. 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.






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






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






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