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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. 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.






2. Yield curves most always...






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






4. Instrumental in moving funds between countries






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






6. 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.






7. 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.






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






9. 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






10. 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.






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






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






13. No interest- rate risk

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






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






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






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






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






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






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






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






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






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. 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.






25. Comparing payoffs at different points in time






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






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






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






29. Short-Term Debt Instruments






30. The central bank






31. 2 -5 -10 year maturities






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






33. Greater incentive to borrow and less to lend.






34. Held for one- ten years.






35. Paper currency - has no real value






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






37. Most Common






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






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






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






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






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






43. Crucial role in creation of money






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






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






46. A share of ownership in a corporation






47. 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






48. What will investors expect for taking on higher default risk?






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






50. 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.