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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. Determines interest rates






2. Excess liquidity is spent on goods and services






3. Short-Term Debt Instruments






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






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






6. Precious Metals or another valueable commodity






7. They channel funds from savers to investors - thereby promoting economic efficiency






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






9. More than 10 year maturities






10. It will shift it to the right.






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






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






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






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






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






16. Rare






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






18. Alters publics liquidity and influences spending through portfolio adjustment






19. Comparing payoffs at different points in time






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






21. 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.






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






23. 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






24. The central bank






25. 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.






26. 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)






27. The relationship between yield and maturity is...






28. Less than one year and service current liquidity needs






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






30. The percent of available labor force unemployed






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






32. Intermediate Yields are highest






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






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






35. Flow of earnings per unit of time






36. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money






37. Lower the equilibrium price and interest rate.






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






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






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






41. Crucial role in creation of money






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






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






44. Long-Term Debt and Equity Instruments






45. Yield curves most always...






46. Relationship among yields of different maturities of hte same type of security.






47. 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.






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






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






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