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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. Principal plus interest paid to lender at given maturity date






2. Comparing payoffs at different points in time






3. Flow of earnings per unit of time






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






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






6. 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.






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






8. 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






9. Allowing consumers to time their purchases better.






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






11. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






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






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






14. 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.






15. Nominal interest rate is not adjusted for inflation.






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






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






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






19. More than 10 year maturities






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






21. The central bank






22. Alters publics liquidity and influences spending through portfolio adjustment






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






24. 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.






25. Excess liquidity is spent on goods and services






26. It will shift it to the right.






27. 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.






28. 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.






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






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






31. 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






32. Praises rising at a fast and furious pace






33. 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






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






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






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






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






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






39. 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.






40. 2 -5 -10 year maturities






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






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






44. Yield curves most always...






45. The total collection of pieces of property that serve to store value






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






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






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






49. 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.






50. Paper currency - has no real value