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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. Yield to maturity; a measure of an interternporal price






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






3. 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.






4. Lower Incentive to borrow but a greater incentive to lend.






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






6. Short-Term Debt Instruments






7. Higher default risk compared to municipal Bonds






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






10. 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






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






12. Lower the equilibrium price and interest rate.






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






14. Less than one year and service current liquidity needs






15. Rare






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






17. Markets bonds - loans - and deposits denominated in the currency of a given nation but held and traded outside that nations borders.






18. The higher the default risk means the yield curve...






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






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






21. 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.






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






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






24. Allowing consumers to time their purchases better.






25. Flow of earnings per unit of time






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






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






28. Determines interest rates






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






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






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






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






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






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






35. 30 year maturities but not since 2001






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






37. Intermediate Yields are highest






38. 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.






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






40. Yields similar for all maturities






41. Crucial role in creation of money






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






43. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






44. Precious Metals or another valueable commodity






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






46. 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


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






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






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






50. 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.