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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. Principal plus interest paid to lender at given maturity date






2. 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

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






4. 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.






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






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






7. Comparing payoffs at different points in time






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






9. Yields similar for all maturities






10. No interest- rate risk

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






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






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






14. 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.






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






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






17. Does not deal directly with the public and responsible for executing of the national monetary policy; implements policy by altering money supply and influencing bank behavior.






18. Yield curves most always...






19. The central bank






20. Lower the equilibrium price and interest rate.






21. A share of ownership in a corporation






22. Precious Metals or another valueable commodity






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






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






25. Paper currency - has no real value






26. Most Common






27. Influence on business cycle - inflation - interest rates






28. Alters publics liquidity and influences spending through portfolio adjustment






29. Crucial role in creation of money






30. Long-Term Debt and Equity Instruments






31. Held for one- ten years.






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






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






34. Short-Term Debt Instruments






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






36. 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.






37. Praises rising at a fast and furious pace






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






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






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






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






42. Greater incentive to borrow and less to lend.






43. 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






44. They have a higher interest-rate risk.






45. 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.






46. Higher default risk compared to municipal Bonds






47. 30 year maturities but not since 2001






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






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






50. More than 10 year maturities