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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. The over the counter market. Equity shares offered by companies that don't meet listing requirements for major stock exchanges - or choose not to be listed there - and instead are traded in decentralized markets.






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






3. 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.






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






5. Alters publics liquidity and influences spending through portfolio adjustment






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






7. Determines interest rates






8. 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






9. Paper currency - has no real value






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






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






12. They have a higher interest-rate risk.






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






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






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






16. Held for one- ten years.






17. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.






18. 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.






19. 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.






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






21. 30 year maturities but not since 2001






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






23. The percent of available labor force unemployed






24. Rare






25. Intermediate Yields are highest






26. 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






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






28. A share of ownership in a corporation






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






30. Long-Term Debt and Equity Instruments






31. 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.






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






33. 2 -5 -10 year maturities






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






35. Greater incentive to borrow and less to lend.






36. 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






37. Allowing consumers to time their purchases better.






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






39. Precious Metals or another valueable commodity






40. Lower the equilibrium price and interest rate.






41. Many lead to more employment and output






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






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






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






45. Excess liquidity is spent on goods and services






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






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






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






49. 4 -13 -26 -52 week maturities. Sold at zero coupon rates






50. Short-Term Debt Instruments