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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. 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.






2. Long-Term Debt and Equity Instruments






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






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






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






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






7. Yields similar for all maturities






8. 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.






9. Paper currency - has no real value






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






11. 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






12. 2 -5 -10 year maturities






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






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






15. It will shift it to the right.






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






17. Used to measure value in the economy






18. Allowing consumers to time their purchases better.






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






20. Most Common






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






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






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. Held for one- ten years.






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






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






27. The percent of available labor force unemployed






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






29. 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.






30. Many lead to more employment and output






31. Higher default risk compared to municipal Bonds






32. A share of ownership in a corporation






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






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






35. Determines interest rates






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






37. Instrumental in moving funds between countries






38. Greater incentive to borrow and less to lend.






39. 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.






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






41. They have a higher interest-rate risk.






42. 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






43. 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.






44. Precious Metals or another valueable commodity






45. Influence on business cycle - inflation - interest rates






46. Nominal interest rate is not adjusted for inflation.






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






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






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






50. Flow of earnings per unit of time