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






2. They have a higher interest-rate risk.






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






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






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






6. Rare






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






8. 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.






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






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






11. The percent of available labor force unemployed






12. 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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13. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.






14. Less accurate but is less difficult to calculate. It always understates the yield to maturity and becomes more severe the longer the maturity.






15. Alters publics liquidity and influences spending through portfolio adjustment






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






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






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






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






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






21. 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






22. Long-Term Debt and Equity Instruments






23. Sold in a foreign country and denominated in that country's currency.






24. Flow of earnings per unit of time






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






26. 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)






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






28. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






29. 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.






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






31. No interest- rate risk

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






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






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






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






36. Excess liquidity is spent on goods and services






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






38. The degree of uncertainty associated with the return on one asset relative to alternative assets.






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






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






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






42. 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.






43. 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.






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






45. 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.






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






47. Comparing payoffs at different points in time






48. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period






49. 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






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