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






2. 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.






3. 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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4. 30 year maturities but not since 2001






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






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






7. Less than one year and service current liquidity needs






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






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






10. Determines interest rates






11. 2 -5 -10 year maturities






12. Foreign currencies deposited in banks outside the home country.






13. It will shift it to the right.






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






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






16. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






17. Alters publics liquidity and influences spending through portfolio adjustment






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






19. 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.






20. Pays owner of bond a fixed payment - until maturity when it pays off face par value






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






22. Many lead to more employment and output






23. A share of ownership in a corporation






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






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






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






27. 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






28. 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






29. Crucial role in creation of money






30. Allowing consumers to time their purchases better.






31. Short-Term Debt Instruments






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






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






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






36. 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






37. 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.






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






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






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






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






42. Paper currency - has no real value






43. 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.






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






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






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






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






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






49. 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.






50. Influence on business cycle - inflation - interest rates