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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. Yield curves most always...






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






3. 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.






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






5. Held for one- ten years.






6. Lower the equilibrium price and interest rate.






7. They have a higher interest-rate risk.






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






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






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






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






12. Precious Metals or another valueable commodity






13. Higher default risk compared to municipal Bonds






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






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






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






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






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






19. 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.






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






21. Alters publics liquidity and influences spending through portfolio adjustment






22. 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.






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






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






25. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






26. Lower transaction costs - reduce risk - asymmetric information.






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






28. Short-Term Debt Instruments






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






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






31. It will shift it to the right.






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






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






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






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






36. The interest rate at which private depository institutions lend balances to other depository institutions usually over night






37. 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.






38. 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.






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






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






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






42. 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)






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






44. More than 10 year maturities






45. Paper currency - has no real value






46. Long-Term Debt and Equity Instruments






47. Comparing payoffs at different points in time






48. 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.






49. 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.






50. 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.







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