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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. Held for one- ten years.






2. No interest- rate risk

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3. 30 year maturities but not since 2001






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






5. 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.






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






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






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






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






10. Yield curves most always...






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






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






14. The percent of available labor force unemployed






15. 2 -5 -10 year maturities






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






17. At lower prices (higher i) - ceteris paribus - the quantity demanded of bonds is higher- an inverse relationship ' ' the quantity supplied of bonds is lower- a positive relationship.






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






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






20. Reduces adverse selection - moral hazard - and insider trading.






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






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






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






24. 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






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






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






27. Precious Metals or another valueable commodity






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






29. 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.






30. 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.






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






32. The increase in the price of set goods and services in a given economy over a period of time - the percent change.






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






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






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






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






37. 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






38. Determines interest rates






39. Many lead to more employment and output






40. 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.






41. The central bank






42. 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.






43. Less than one year and service current liquidity needs






44. 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.






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






46. Instrumental in moving funds between countries






47. Most Common






48. 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






49. 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.






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