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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. Flow of earnings per unit of time






2. Yields similar for all maturities






3. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.






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






5. Nominal interest rate is not adjusted for inflation.






6. More than 10 year maturities






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






8. They have a higher interest-rate risk.






9. Precious Metals or another valueable commodity






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






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






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






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. Held for one- ten years.






15. 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.






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






17. Crucial role in creation of money






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






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






20. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






21. Excess liquidity is spent on goods and services






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






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






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






25. Relationship among yields of different maturities of hte same type of security.






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






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






28. Used to measure value in the economy






29. It will shift it to the right.






30. Rare






31. 2 -5 -10 year maturities






32. They channel funds from savers to investors - thereby promoting economic efficiency






33. Less than one year and service current liquidity needs






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






35. 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






36. 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.






37. 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.






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






39. 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.






40. Lower the equilibrium price and interest rate.






41. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept






42. Alters publics liquidity and influences spending through portfolio adjustment






43. Long-Term Debt and Equity Instruments






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






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






46. 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






47. Intermediate Yields are highest






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






49. Most Common






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