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






2. Yields similar for all maturities






3. 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






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






5. 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.






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






7. Intermediate Yields are highest






8. Most Common






9. 2 -5 -10 year maturities






10. Higher default risk compared to municipal Bonds






11. 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.






12. Flow of earnings per unit of time






13. A higher level of income causes the demand for money at each interest rate to increase and the demand curve to shift to the right.






14. Praises rising at a fast and furious pace






15. Crucial role in creation of money






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






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






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






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






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






21. Influence on business cycle - inflation - interest rates






22. Short-Term Debt Instruments






23. Less than one year and service current liquidity needs






24. Yield curves most always...






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






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






27. Periods of declining aggregate output - unemployment high - investment is low.






28. 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






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






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






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






32. Lower the equilibrium price and interest rate.






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






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






35. Excess liquidity is spent on goods and services






36. The percent of available labor force unemployed






37. They have a higher interest-rate risk.






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






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






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






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






42. More than 10 year maturities






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






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. 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.






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






47. No interest- rate risk


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






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






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