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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. Lower transaction costs - reduce risk - asymmetric information.






2. 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.






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






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






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






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






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






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






9. 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)






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






11. 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






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






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






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






15. A share of ownership in a corporation






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






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






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






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






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






21. 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.






22. Lower the equilibrium price and interest rate.






23. 30 year maturities but not since 2001






24. Short-Term Debt Instruments






25. More than 10 year maturities






26. Held for one- ten years.






27. Long-Term Debt and Equity Instruments






28. 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






29. Allowing consumers to time their purchases better.






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






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






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






33. Most Common






34. Determines interest rates






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






36. Bringing together of buyers and sellers of financial securities to establish prices; includes banks - savings and loans - credit unions - investment banks - and brokers - mutual funds - and bond markets.






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. 2 -5 -10 year maturities






39. They have a higher interest-rate risk.






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






41. Intermediate Yields are highest






42. Producing an efficient allocation of capital - which increases production






43. 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.






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






46. 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.






47. 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.






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






49. Praises rising at a fast and furious pace






50. 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.