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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. 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.






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






3. Yields similar for all maturities






4. 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.






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






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






7. 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.






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






9. Rare






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






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






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






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






14. Held for one- ten years.






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






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






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






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






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






20. 2 -5 -10 year maturities






21. 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.






22. 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.






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






24. Yield curves most always...






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






26. 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.






27. 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.






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






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






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






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






33. 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






34. 30 year maturities but not since 2001






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






36. Short-Term Debt Instruments






37. 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.






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






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






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






41. They have a higher interest-rate risk.






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






43. Nominal interest rate is not adjusted for inflation.






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






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






46. The over the counter market. Equity shares offered by companies that don't meet listing requirements for major stock exchanges - or choose not to be listed there - and instead are traded in decentralized markets.






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






48. Most Common






49. Flow of earnings per unit of time






50. Many lead to more employment and output