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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. 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.






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






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






4. Long-Term Debt and Equity Instruments






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






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






7. Less than one year and service current liquidity needs






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






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






10. 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)






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






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






13. 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.






14. 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.






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






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






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






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






19. Yield curves most always...






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






21. Alters publics liquidity and influences spending through portfolio adjustment






22. Yields similar for all maturities






23. 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.






24. Rare






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






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






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






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






29. 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.






30. Many lead to more employment and output






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






32. 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.






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






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






35. 2 -5 -10 year maturities






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






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






38. 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






39. Intermediate Yields are highest






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






41. Used to save purchasing power; most liquid of all assets but loses value during inflation






42. The percent of available labor force unemployed






43. 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.






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






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






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






47. More than 10 year maturities






48. 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.






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






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