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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. 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.






2. Instrumental in moving funds between countries






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






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






5. Most Common






6. 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.






7. 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






8. 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






9. Alters publics liquidity and influences spending through portfolio adjustment






10. Higher default risk compared to municipal Bonds






11. 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






12. It will shift it to the right.






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






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






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






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






17. Yields similar for all maturities






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






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






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






21. The central bank






22. 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.






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






24. Less than one year and service current liquidity needs






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






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






27. If short-term interest rates are low than the yield curve slopes...






28. Flow of earnings per unit of time






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






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






31. 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.






32. 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.






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






34. Yield curves most always...






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






36. 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)






37. Allowing consumers to time their purchases better.






38. 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.






39. The upward and downward movement of aggregate output produced in the economy.






40. 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.






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






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






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






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






45. Long-Term Debt and Equity Instruments






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






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






48. Crucial role in creation of money






49. What kind of movements should we pay attention to in money supply numbers?






50. 30 year maturities but not since 2001