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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. Intermediate Yields are highest






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. Producing an efficient allocation of capital - which increases production






4. They have a higher interest-rate risk.






5. Rare






6. Held for one- ten years.






7. 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)






8. 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.






9. Paper currency - has no real value






10. No interest- rate risk

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11. Short-Term Debt Instruments






12. 30 year maturities but not since 2001






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






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






15. Less than one year and service current liquidity needs






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






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






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






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






20. 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






21. 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






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






23. 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.






24. 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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25. Principal plus interest paid to lender at given maturity date






26. It will shift it to the right.






27. 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.






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






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






30. Most Common






31. A share of ownership in a corporation






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






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






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






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






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






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






38. 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.






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






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. Excess liquidity is spent on goods and services






42. Lower the equilibrium price and interest rate.






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






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






45. Alters publics liquidity and influences spending through portfolio adjustment






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






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






48. Influence on business cycle - inflation - interest rates






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






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







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