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DSST Money And Banking

Subjects : dss, bankingt
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. 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.






2. Nominal interest rate is not adjusted for inflation.






3. Used to measure value in the economy






4. 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






5. 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.






6. 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.






7. Crucial role in creation of money






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






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






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






11. Long-Term Debt and Equity Instruments






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






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






14. 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)






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






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






17. Lower the equilibrium price and interest rate.






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






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






20. Intermediate Yields are highest






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






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






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






24. It will shift it to the right.






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






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






27. They have a higher interest-rate risk.






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






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






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






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






32. 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






33. Flow of earnings per unit of time






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






35. Greater incentive to borrow and less to lend.






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






37. 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.






38. Many lead to more employment and output






39. 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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40. 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.






41. 30 year maturities but not since 2001






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






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






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






45. Praises rising at a fast and furious pace






46. Higher default risk compared to municipal Bonds






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






48. 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.






49. Alters publics liquidity and influences spending through portfolio adjustment






50. Allowing consumers to time their purchases better.







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