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






3. Allowing consumers to time their purchases better.






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






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






6. 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.






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






8. Most Common






9. Excess liquidity is spent on goods and services






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






11. A share of ownership in a corporation






12. 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






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






14. Less than one year and service current liquidity needs






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






16. Held for one- ten years.






17. 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)






18. 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






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






20. 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.






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






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






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






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






25. Greater incentive to borrow and less to lend.






26. The central bank






27. 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.






28. 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.






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






30. 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.






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






32. Comparing payoffs at different points in time






33. Many lead to more employment and output






34. 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.






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






36. 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


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






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






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






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






41. 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.






42. It will shift it to the right.






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






44. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






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






46. Used to measure value in the economy






47. 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.






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. Short-Term securities are very good substitutes for each other within investor's portfolios who collectively impact the market. There aren't separate markets for short-term and long-term securities - there is one single market.






50. More than 10 year maturities