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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. 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






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






3. 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






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






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






6. 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.






7. Praises rising at a fast and furious pace






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






9. 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.






10. 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.






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






12. 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.






13. Yields similar for all maturities






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






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






16. Precious Metals or another valueable commodity






17. Most Common






18. Many lead to more employment and output






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






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






21. Held for one- ten years.






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






23. Intermediate Yields are highest






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






25. The percent of available labor force unemployed






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






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






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






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






30. Lower the equilibrium price and interest rate.






31. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






32. Comparing payoffs at different points in time






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






34. No interest- rate risk

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






36. The total collection of pieces of property that serve to store value






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






38. A share of ownership in a corporation






39. 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.






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






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






42. Long-Term Debt and Equity Instruments






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






44. Higher default risk compared to municipal Bonds






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






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






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






48. Influence on business cycle - inflation - interest rates






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






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