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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. 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.






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






3. 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.






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






6. 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.






7. Long-Term Debt and Equity Instruments






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






9. Praises rising at a fast and furious pace






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






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






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






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






14. 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.






15. 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.






16. The percent of available labor force unemployed






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






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






19. Nominal interest rate is not adjusted for inflation.






20. Used to measure value in the economy






21. It will shift it to the right.






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






23. 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.






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






25. Bringing together of buyers and sellers of financial securities to establish prices; includes banks - savings and loans - credit unions - investment banks - and brokers - mutual funds - and bond markets.






26. Precious Metals or another valueable commodity






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






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






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






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






31. 30 year maturities but not since 2001






32. 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






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






34. The return expected over the next period on one asset relative to the alternative asset.






35. Yields similar for all maturities






36. Alters publics liquidity and influences spending through portfolio adjustment






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






38. Instrumental in moving funds between countries






39. Allowing consumers to time their purchases better.






40. Intermediate Yields are highest






41. Greater incentive to borrow and less to lend.






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






43. Paper currency - has no real value






44. Crucial role in creation of money






45. The total collection of pieces of property that serve to store value






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






47. 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.






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






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






50. The central bank