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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. Investors are concerned about the after tax return on bonds






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






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






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






5. The percent of available labor force unemployed






6. Intermediate Yields are highest






7. 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.






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






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






10. No interest- rate risk

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11. 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.






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






13. 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.






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






15. 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)






16. More than 10 year maturities






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






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






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






20. 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.






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






23. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






24. Alters publics liquidity and influences spending through portfolio adjustment






25. Less than one year and service current liquidity needs






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






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






28. 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.






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






30. 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.






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






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






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






34. 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.






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






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






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






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






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






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






41. Paper currency - has no real value






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






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






44. Greater incentive to borrow and less to lend.






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






47. It will shift it to the right.






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






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






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







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