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






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






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






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






5. Precious Metals or another valueable commodity






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






7. Determines interest rates






8. Paper currency - has no real value






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






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






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






12. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






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






14. 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.






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






16. Allowing consumers to time their purchases better.






17. 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






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






19. 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






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






21. Many lead to more employment and output






22. 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.






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






24. Influence on business cycle - inflation - interest rates






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






26. 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.






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






28. 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.






29. Less than one year and service current liquidity needs






30. Yield curves most always...






31. Praises rising at a fast and furious pace






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






33. The percent of available labor force unemployed






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






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






36. No interest- rate risk


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






38. Graphical relationship of the yield on bonds with differing terms to maturity but the same risk - liquidity and tax considerations.






39. 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.






40. Excess liquidity is spent on goods and services






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






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






43. Crucial role in creation of money






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






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






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






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






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






49. 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.






50. 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