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DSST Money And Banking

Subjects : dss, bankingt
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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 market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One






2. 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.






3. 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.






4. 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






5. 30 year maturities but not since 2001






6. Yield curves most always...






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






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






9. 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.






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






11. 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






12. Restrictions on Entry - Restrictions on Assets and Activities - Disclosure - Deposit Insurance - Limits on competition - and restriction on interest rates.






13. 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.






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






15. Short-Term Debt Instruments






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






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






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






19. 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.






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






21. 2 -5 -10 year maturities






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






23. Greater incentive to borrow and less to lend.






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






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






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






27. Alters publics liquidity and influences spending through portfolio adjustment






28. Held for one- ten years.






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






30. Determines interest rates






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






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






33. Higher default risk compared to municipal Bonds






34. 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.






35. 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.






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






37. Instrumental in moving funds between countries






38. Many lead to more employment and output






39. Most Common






40. It will shift it to the right.






41. 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.






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






43. They channel funds from savers to investors - thereby promoting economic efficiency






44. 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.






45. Influence on business cycle - inflation - interest rates






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






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






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






50. Lower the equilibrium price and interest rate.