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






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. Short-Term Debt Instruments






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






5. They have a higher interest-rate risk.






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






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






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






9. Allowing consumers to time their purchases better.






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






11. Nominal interest rate is not adjusted for inflation.






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






13. 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.






14. 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.






15. Comparing payoffs at different points in time






16. 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.






17. Determines interest rates






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






19. Instrumental in moving funds between countries






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






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






22. Praises rising at a fast and furious pace






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






24. Higher default risk compared to municipal Bonds






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






26. 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.






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






28. The percent of available labor force unemployed






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






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






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






32. 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.






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






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






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






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






37. Rare






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






39. 30 year maturities but not since 2001






40. 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






41. Investors are concerned about the after tax return on bonds






42. Greater incentive to borrow and less to lend.






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






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






45. Crucial role in creation of money






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






47. Used to measure value in the economy






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






49. 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.






50. Influence on business cycle - inflation - interest rates