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






2. 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.






3. Higher default risk compared to municipal Bonds






4. 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.






5. It will shift it to the right.






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






7. Crucial role in creation of money






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






9. 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.






10. 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)






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






12. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






13. Long-Term Debt and Equity Instruments






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






15. They have a higher interest-rate risk.






16. 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






17. Nominal interest rate is not adjusted for inflation.






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






19. Yield curves most always...






20. Excess liquidity is spent on goods and services






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






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






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






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






25. 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.






26. 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






27. Praises rising at a fast and furious pace






28. 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.






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






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






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






32. Held for one- ten years.






33. 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.






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






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






36. 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.






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






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






39. Many lead to more employment and output






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






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






42. Most Common






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






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






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






46. 30 year maturities but not since 2001






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






49. 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.






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