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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. Greater incentive to borrow and less to lend.






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






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






4. 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






5. 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.






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






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






8. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






9. Used to measure value in the economy






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






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






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






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






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






15. 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.






16. 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.






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






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






19. Take the form of promissory notes - drafts - checks - and CDs






20. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.






21. More than 10 year maturities






22. Flow of earnings per unit of time






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






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






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






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






27. A share of ownership in a corporation






28. Allowing consumers to time their purchases better.






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






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






31. 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.






32. 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.






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. The central bank






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






36. It will shift it to the right.






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






38. Yield curves most always...






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






41. 2 -5 -10 year maturities






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






43. Less than one year and service current liquidity needs






44. Nominal interest rate is not adjusted for inflation.






45. Higher default risk compared to municipal Bonds






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






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






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






49. Crucial role in creation of money






50. 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.