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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. Greater incentive to borrow and less to lend.






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






3. 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.






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






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






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






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






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






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






10. Does not deal directly with the public and responsible for executing of the national monetary policy; implements policy by altering money supply and influencing bank behavior.






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






12. Crucial role in creation of money






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






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






15. Precious Metals or another valueable commodity






16. Yields similar for all maturities






17. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.






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






19. Used to measure value in the economy






20. 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.






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






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






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






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






25. Short-Term Debt Instruments






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






27. 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.






28. If the short-term interest rates are high than the yield curve slopes?






29. 30 year maturities but not since 2001






30. Many lead to more employment and output






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






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






33. Paper currency - has no real value






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






35. It will shift it to the right.






36. Nominal interest rate is not adjusted for inflation.






37. 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.






38. 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.






39. 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.






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






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






42. Rare






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






44. Intermediate Yields are highest






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






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






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






48. Long-Term Debt and Equity Instruments






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 central bank







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