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






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






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






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






5. Paper currency - has no real value






6. Used to measure value in the economy






7. Flow of earnings per unit of time






8. 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.






9. 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.






10. Allowing consumers to time their purchases better.






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






12. Determines interest rates






13. Instrumental in moving funds between countries






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






15. The percent of available labor force unemployed






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






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






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






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






20. 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.






21. 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






22. Crucial role in creation of money






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






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






25. No interest- rate risk

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






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






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






29. Alters publics liquidity and influences spending through portfolio adjustment






30. More than 10 year maturities






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






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






33. 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.






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






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






36. Less than one year and service current liquidity needs






37. 30 year maturities but not since 2001






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






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






40. 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)






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






42. Rare






43. Lower the equilibrium price and interest rate.






44. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






45. Short-Term Debt Instruments






46. Most Common






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






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






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






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