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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. 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






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






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






4. Intermediate Yields are highest






5. The central bank






6. At lower prices (higher i) - ceteris paribus - the quantity demanded of bonds is higher- an inverse relationship ' ' the quantity supplied of bonds is lower- a positive relationship.






7. Long-Term Debt and Equity Instruments






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






9. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.






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






11. Many lead to more employment and output






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






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






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






15. Allowing consumers to time their purchases better.






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






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






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






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






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






22. Nominal interest rate is not adjusted for inflation.






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






24. 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.






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






26. 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.






27. Rare






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






29. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.






30. Higher default risk compared to municipal Bonds






31. Determines interest rates






32. Less than one year and service current liquidity needs






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






34. 2 -5 -10 year maturities






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






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






37. Short-Term Debt Instruments






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






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






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






41. Lower the equilibrium price and interest rate.






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






43. Held for one- ten years.






44. 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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45. Greater incentive to borrow and less to lend.






46. Crucial role in creation of money






47. Comparing payoffs at different points in time






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






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






50. 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.