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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. 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.






2. Instrumental in moving funds between countries






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






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






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






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






8. 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.






9. Excess liquidity is spent on goods and services






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






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






12. Paper currency - has no real value






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






14. Nominal interest rate is not adjusted for inflation.






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






16. A share of ownership in a corporation






17. 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.






18. Intermediate Yields are highest






19. Precious Metals or another valueable commodity






20. Long-Term Debt and Equity Instruments






21. 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.






22. Praises rising at a fast and furious pace






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






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






25. 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






26. 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.






27. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






28. Comparing payoffs at different points in time






29. 30 year maturities but not since 2001






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






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






32. No interest- rate risk

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33. 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.






34. 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.






35. Yields similar for all maturities






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






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






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






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






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






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






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






43. Short-Term Debt Instruments






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






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






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






47. Determines interest rates






48. The percent of available labor force unemployed






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






50. 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.