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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. More than 10 year maturities






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






5. A share of ownership in a corporation






6. Greater incentive to borrow and less to lend.






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






8. 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.






9. 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.






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






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






12. 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)






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






14. Intermediate Yields are highest






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






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






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






18. It will shift it to the right.






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






20. Less than one year and service current liquidity needs






21. No interest- rate risk

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22. They have a higher interest-rate risk.






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






24. Alters publics liquidity and influences spending through portfolio adjustment






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






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






27. Nominal interest rate is not adjusted for inflation.






28. 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






29. 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.






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






31. 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.






32. The percent of available labor force unemployed






33. 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.






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






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






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






37. Excess liquidity is spent on goods and services






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






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






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






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






43. Paper currency - has no real value






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






45. 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






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






47. Instrumental in moving funds between countries






48. Influence on business cycle - inflation - interest rates






49. Flow of earnings per unit of time






50. Lower the equilibrium price and interest rate.