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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. The interest rate at which private depository institutions lend balances to other depository institutions usually over night






2. 2 -5 -10 year maturities






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






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






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






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






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






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






9. 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






10. 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.






11. They have a higher interest-rate risk.






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






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






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






15. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






16. They channel funds from savers to investors - thereby promoting economic efficiency






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






18. Most Common






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






20. 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)






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






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






23. 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


24. A share of ownership in a corporation






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






26. Short-Term Debt Instruments






27. 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.






28. Higher default risk compared to municipal Bonds






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






30. Yields similar for all maturities






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






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






33. Excess liquidity is spent on goods and services






34. Comparing payoffs at different points in time






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






36. Rare






37. 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.






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






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






40. Held for one- ten years.






41. Intermediate Yields are highest






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






43. Lower the equilibrium price and interest rate.






44. Greater incentive to borrow and less to lend.






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






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






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






48. 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






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






50. Long-Term Debt and Equity Instruments