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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. They have a higher interest-rate risk.






2. 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






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






4. Excess liquidity is spent on goods and services






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






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






7. Allowing consumers to time their purchases better.






8. Flow of earnings per unit of time






9. For a commodity to function efficiently as money it must be...






10. 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.






11. Paper currency - has no real value






12. Lower the equilibrium price and interest rate.






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






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






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






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 percent of available labor force unemployed






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






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






21. Less than one year and service current liquidity needs






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






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






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






25. Instrumental in moving funds between countries






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






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






28. 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






29. How interest rates on bonds of different maturities move over time






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






31. A share of ownership in a corporation






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






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






34. Used to measure value in the economy






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






36. Influence on business cycle - inflation - interest rates






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






38. It will shift it to the right.






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






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






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






42. 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






43. 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.






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






45. Intermediate Yields are highest






46. Sold in a foreign country and denominated in that country's currency.






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. Lower transaction costs - reduce risk - asymmetric information.






49. The central bank






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