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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. Expectations theory forms the foundation of the slope of the curve. Liquidity Premium Theory makes Long Term permanent modifications that suggests an up ward slopping curve. Over short periods - relatives supplies of securities have an impact on yiel






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






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






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






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






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






7. Paper currency - has no real value






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






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






10. 2 -5 -10 year maturities






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






12. 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)






13. Precious Metals or another valueable commodity






14. Comparing payoffs at different points in time






15. More than 10 year maturities






16. 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.






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






18. Many lead to more employment and output






19. 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.






20. Short-Term securities are very good substitutes for each other within investor's portfolios who collectively impact the market. There aren't separate markets for short-term and long-term securities - there is one single market.






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






22. Used to measure value in the economy






23. 30 year maturities but not since 2001






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






25. Determines interest rates






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






27. Instrumental in moving funds between countries






28. A dollar paid to you one year from now is less valueable than a dollar paid to you today






29. Excess liquidity is spent on goods and services






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






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






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






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






34. The percent of available labor force unemployed






35. Lower the equilibrium price and interest rate.






36. 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






37. The higher the default risk means the yield curve...






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






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






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






41. 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.






42. A share of ownership in a corporation






43. 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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44. Alters publics liquidity and influences spending through portfolio adjustment






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






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






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






48. No interest- rate risk

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49. Nominal interest rate is not adjusted for inflation.






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