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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. 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.






2. 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.






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






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






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






6. Greater incentive to borrow and less to lend.






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






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






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






11. Nominal interest rate is not adjusted for inflation.






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






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






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






15. Short-Term Debt Instruments






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






17. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






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






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






20. Alters publics liquidity and influences spending through portfolio adjustment






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






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. Flow of earnings per unit of time






24. Many lead to more employment and output






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






26. Medium of exchange; unit of account; store of value; increases the liquidity in the economy






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






28. Comparing payoffs at different points in time






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






30. The central bank






31. Expectations theory forms the foundation of the slope of the curve. Liquidity Premium Theory makes Long Term permanent modifications that suggests an up ward slopping curve. Over short periods - relatives supplies of securities have an impact on yiel






32. Rare






33. Crucial role in creation of money






34. 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.






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






36. 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.






37. Held for one- ten years.






38. 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.






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






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






41. 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






42. Foreign currencies deposited in banks outside the home country.






43. Less than one year and service current liquidity needs






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






45. If short-term interest rates are low than the yield curve slopes...






46. Most Common






47. Higher default risk compared to municipal Bonds






48. Yields similar for all maturities






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






50. Excess liquidity is spent on goods and services