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






2. Flow of earnings per unit of time






3. Pays owner of bond a fixed payment - until maturity when it pays off face par value






4. Greater incentive to borrow and less to lend.






5. Alters publics liquidity and influences spending through portfolio adjustment






6. The central bank






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






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






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






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






11. 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






12. 30 year maturities but not since 2001






13. 2 -5 -10 year maturities






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






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






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






17. 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.






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






19. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






20. Nominal interest rate is not adjusted for inflation.






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. 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.






23. 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.






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






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






26. Crucial role in creation of money






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






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






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






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






31. They have a higher interest-rate risk.






32. Lower the equilibrium price and interest rate.






33. 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)






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






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






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






37. 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.






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






39. Used to measure value in the economy






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






41. 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






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






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






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






45. Most Common






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






47. 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.






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






49. 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.






50. The percent of available labor force unemployed