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






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






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






4. Intermediate Yields are highest






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






6. Paper currency - has no real value






7. 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.






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






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. Crucial role in creation of money






11. 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.






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






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






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






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






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






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






18. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






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






20. 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.






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






22. Determines interest rates






23. Less than one year and service current liquidity needs






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






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






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






27. The percent of available labor force unemployed






28. 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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29. Alters publics liquidity and influences spending through portfolio adjustment






30. 30 year maturities but not since 2001






31. Used to measure value in the economy






32. 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






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






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






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






36. Yields similar for all maturities






37. Lower the equilibrium price and interest rate.






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






39. 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.






40. The central bank






41. Nominal interest rate is not adjusted for inflation.






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






43. If short-term interest rates are low than the yield curve slopes...






44. More than 10 year maturities






45. 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






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






47. Comparing payoffs at different points in time






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






49. Short-Term Debt Instruments






50. Greater incentive to borrow and less to lend.