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






2. Lower excess demand and lower price will rise and interest rates will fall






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






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






5. Short-Term Debt Instruments






6. Less than one year and service current liquidity needs






7. Excess liquidity is spent on goods and services






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






9. Long-Term debt instruments of Corporations which are held 2-30 years. These securities have excellent credit ratings and pay interest two times a year and pay at maturity. These can be redeemed for shares of stock.






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






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






12. 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.






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






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






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






16. Crucial role in creation of money






17. Instrumental in moving funds between countries






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






19. Intermediate Yields are highest






20. Yields similar for all maturities






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






22. 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.






23. Alters publics liquidity and influences spending through portfolio adjustment






24. No interest- rate risk

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25. Most Common






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






27. More than 10 year maturities






28. 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.






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






30. 30 year maturities but not since 2001






31. 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.






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






33. Flow of earnings per unit of time






34. Negotiable in secondary market and can also be resold in the secondary market. Minimum purchase of $100 -000 but the minimum in the secondary market is $2 -000 -000.






35. 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)






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






37. A share of ownership in a corporation






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






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. Paper currency - has no real value






41. Greater incentive to borrow and less to lend.






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






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






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






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






46. Long-Term Debt and Equity Instruments






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






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






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






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