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






2. Allowing consumers to time their purchases better.






3. 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.






4. Held for one- ten years.






5. 30 year maturities but not since 2001






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






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






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






9. 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.






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






11. A share of ownership in a corporation






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






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






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






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






16. Less than one year and service current liquidity needs






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






18. Crucial role in creation of money






19. Yield curves most always...






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






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






22. Short-Term Debt Instruments






23. 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






24. Alters publics liquidity and influences spending through portfolio adjustment






25. 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.






26. Greater incentive to borrow and less to lend.






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






28. 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.






29. 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.






30. 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.






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






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






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






34. 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.






35. Precious Metals or another valueable commodity






36. Intermediate Yields are highest






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






38. Bond denominated in a currency other than that of the country in which it is sold.






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






40. 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.






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






42. Used to measure value in the economy






43. Excess liquidity is spent on goods and services






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






45. 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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46. 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.






47. More than 10 year maturities






48. Flow of earnings per unit of time






49. Praises rising at a fast and furious pace






50. Rare







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