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Financial instruments are assets that have a monetary value or record a monetary transaction. To coordinate the exchange of capital between borrowers and lenders, financial instruments trade in the financial markets. These financial instruments can be categorized on the basis of their issuers, maturity, risk, and other factors Identify the financial instruments based on the following descriptions Description Issued by nonfederal government entities, these financial instruments are debt securities that fund their capital expenditures. They are exempt from most taxes imposed in the area where the securities are issued Issued by major banks, these short-term instruments pay higher interest than Treasury securities, but still have low returns. Risk depends on the financial strength of the bank These financial instruments are U.S. dollar deposits outside the United States that earn interest over a certain time period. Risk associated with these deposits depends on the risk of the issuing bank Issued by corporations, these financial instruments give their holders a class ownership in a company. They are riskier than bonds but less risky than the general class of ownership Financial Instrument vernmen U.S. Treasury bonds Money market mutual funds Commercial paper Money market mutual funds Eurodollar time deposits Consumer credit Preferred stocks orporate bonds Common stocks Which of the following instruments are traded in the capital markets? Check all that apply. Eurodollar time deposits Bankers' acceptances Treasury bills Commercial paper Common stocks The process through which savings and loan associations (S&Ls), banks, and entities such as Fannie Mae and Freddie Mac create financial instruments Credit default swap securitization by combining other financial assets, such as mortgages and credit card debt, is called

Answer 1

Issued by Non- federal Gout, entities, these financial instruments are debt- securities that fund their capital expenditures. They are exempt from most taxes imposed in the area where the securities are issued, Answer State and Local Goverment Bonds Explanation State and Local Gout. bonds are I also known as Municipal. Bonds. These are issued by state of municipality to fund capital expenditure projects for example of construction of schools. That is why they are mostly exempt in from taxes in their area. U.S. Treasury Bills and U.S. Toeasury Bonds, they both are wrong as they are issued by Treasury Department of wisi.. © Issued by major banks, these short term pay than higher interest instruments Treasury securities, but still have low returns. Risk Depends on financial strength of the bank.

Answert. Negotiable certificate of Deposits Explanation. A negotiable certificate of deposit is a certificate of deposit with minimum face value of $100,000. They are issued by major banks or guaranteed by banks. These are low risk, low interest security but the interest on these is more than that of treasury securities. ② These financial instruments are u.s. Dollar instrument deposits outside the United States that earn interest over a certain period. Risk assosciated with these depends on the risk of issuing benti Answert Euro dollar time deposits are the dollar deposit U. s. in Explanations Eurodollar time deposits - which are made outside with a bank or bank branch. © Issued by corporations, these financial instruments give their holders a class ownership in a company. They are riskier than the gener bonds

but less risky then the general class of ownership. Answert Preferred stock Explanations Preferred stock is the stock which is less risky than common stock because the dividend is paid on these is before any dividend paid on common equity. . But, they are riskier than corporate bonds because interest is paid on bonds firstly, then any dividend is paid. Similarly, in case of liquidation, cosporate bonds are paid first, then preferred stock and then common stock. And also the common stock provides ownership as as well voting rights to the stockholder but preferred stock only provides ownership, not voting rights.

③ which of the following instruments are traded in capital market? Answert common stocks Explanation Only common stock is traded in . capital market out of all the options here. All other options are part of money market and traded in money market © The process through which savings and loan assosciation (S&Ls) , banks, and entities such as fannie Mae and Freddie Mac create financial instruments by combining other financial assets, such as mortgages and credit card debt is called - Answert Securitization Explanation Securitization is a process by which the banks , entities, companies club its different financial asset , debt to form consolidated financial instrument, then issued to investors.