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






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






3. Lower transaction costs - reduce risk - asymmetric information.






4. 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.






5. The central bank






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






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






8. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






9. 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.






10. Many lead to more employment and output






11. Paper currency - has no real value






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






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






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






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






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






17. Precious Metals or another valueable commodity






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






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






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






21. 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.






22. 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.






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






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






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






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






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






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






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






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






31. Comparing payoffs at different points in time






32. 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.






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






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






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






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






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






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






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






41. 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






42. 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






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 share of ownership in a corporation






45. Allowing consumers to time their purchases better.






46. Flow of earnings per unit of time






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






48. 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.






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






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