Group 3 Report

Question 1

is generally used to refer to a written promise to repay debt. Certificate of deposit, promissory notes, bond certificates, are some examples, as they are forms of obligation issued by a government of corporate entity.

Answer 1

Certificate of Indebtedness

Question 2

used as a reference for inflation and deflation, or the rise and fall of prices in the economy.

Answer 2

Movement in prices

Question 3

refers to the buying power of money or inflation; how much people can buy with the same dollar of currency.

Answer 3

Price level

Question 4

is when the prices of goods and services rise more than 50% in a month.

Answer 4

Hyperinflation

Question 5

What are the causes of Hyperinflation

Answer 5

(1) Conflict or Financial Crisis
(2) Economic Depression and/or Deficit
(3) Excessive demand for Currency

Question 6

is the central banking system of United States

Answer 6

Federal Reserve System or FED

Question 7

refers to the purchase and sale of securities in the open market by central bank,

Answer 7

Open Market Operation

Question 8

Types of Open Market Operations

Answer 8

(1) Permanent Open Market Operations
(2) Temporary Open Market Operations

Question 9

refers to outright purchases or sales of securities by a central bank.

Answer 9

Permanent Open Market Operations

Question 10

are used to add or drain reserves available to the banking system on a short term basis.

Answer 10

Temporary Open Market Operations

Question 11

Temporary Open Market Operations can either be:

Answer 11

(1) Repurchase agreements or (2) Reverse repurchase agreements

Question 12

are government bills, notes, and bonds that are purchased by many individual consumers. Are first issued by the government and then raised in the secondary market.

Answer 12

Treasury securities or Treasuries

Question 13

If the Fed’’s goal is to expand the money supply and boost demand.

Answer 13

Expansionary Policy

Question 14

If the Fed’s goal is to contract the money supply and decrease demand.

Answer 14

Contractionary Policy

Question 15

Benefits of Open Market Operations:

Answer 15

to prevent price inflation or deflation without directly interfering in the market economy.

Question 16

used to :
* expand the money supply and support economic activity; or
* contract the money supply and slow down activity

Answer 16

Open Market Operations

Question 17

is an alternate, non-traditional tool that the fed also uses for monetary policy purposes.

it involves the buying of securities on a very large scale to spur or steady the economy.

Answer 17

Quantitative easing

Question 18

Financial institutions typically base interest rates for consumer and business loan on the ______

Answer 18

Federal Funds Rate

Question 19

In order to promote liquidity and solvency for the banking system.

Monetary Board issue regulations with respect to maximum permissible maturities of the loans and investments and the kind and amount of security to be required against the various types of credit operations.

Answer 19

Required security against bank loans

Question 20

The maximum permitted level, which can apply to prices, debt, and other type of related financial measure.

Answer 20

Portfolio Ceiling

Question 21

It is adirect limitation on the amount of loans and investments that banks may extend.

Answer 21

Imposition of Portfolio Ceiling

Question 22

Laws enacted by the government to regulate prices.

Answer 22

Price Control

Question 23

Prevent a price from rising above a certain level.

Answer 23

Price Ceiling

Question 24

Prevent a price from falling below a certain level.

Answer 24

Price Floor

Question 25

is applied on a consolidated basis to internationally active banks to address the risk management practices for active financial institutions in the International area.

Answer 25

Basel Capital Accord

Question 26

measures the funds it has in reserve against the riskier assets it holds that could be vulnerable in the event of a crisis.

Answer 26

Capital ratio

Question 27

Document issued by a bank on buyer’s behalf that guarantees payment to the seller.

Answer 27

Letter of credit

Question 28

is THE PERCENTAGE OF THE PURCHASE PRICE OF A SECURITY THAT MUST BE COVERED BY CASH OR COLLATERAL

Answer 28

Margin requirements

Question 29

IS BUYING MORE
STOCKS WITH THAT STOCK
AS COLLATERAL

Answer 29

Margin

Question 30

is a notice from the broker requiring you to post more cash into your account.

Answer 30

Margin Call

Question 31

this is typically set by the stock exchange or the broker.

Answer 31

Maintenance Margin

Question 32

is the act of persuading a person or group to act in a certain way through rhetorical appeals, persuasion, or implicit and explicit threats - as opposed to the use of outright coercion or physical force

Answer 32

Moral Suasion

Question 33

is a short term loan where a dealer sells government securities and buys them back at a higher prices.

Answer 33

Repurchase Agreement

Question 34

is the purchase of securities with the agreement to sell them at a higher price at a specific date.

Answer 34

Reverse Repurchase Agreement

Question 35

It is a program through which the federal reserve banks over interest-bearing term deposits to eligible institutions.

Answer 35

Term Deposit Facility

Question 36

is a central bank lending facility meant to help commercial banks manage short term liquidity needs.

Answer 36

Discount Window Lending