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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. Precious Metals or another valueable commodity






2. Less than one year and service current liquidity needs






3. Nominal interest rate is not adjusted for inflation.






4. 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.






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






6. 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.






7. 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






8. The percent of available labor force unemployed






9. Excess liquidity is spent on goods and services






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






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






12. Lower the equilibrium price and interest rate.






13. 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.






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






15. Determines interest rates






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






17. Many lead to more employment and output






18. 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.






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






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






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






22. Yields similar for all maturities






23. No interest- rate risk


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






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






26. 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.






27. 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.






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






29. 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)






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






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






32. The over the counter market. Equity shares offered by companies that don't meet listing requirements for major stock exchanges - or choose not to be listed there - and instead are traded in decentralized markets.






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






34. 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.






35. A share of ownership in a corporation






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






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






38. 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






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






40. Crucial role in creation of money






41. Promotes economic efficiency by minimizing the time spent in exchanging goods and services






42. Instrumental in moving funds between countries






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






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






45. Used to measure value in the economy






46. More than 10 year maturities






47. 30 year maturities but not since 2001






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






49. Most Common






50. Greater incentive to borrow and less to lend.