Question

1: 

a: 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.

b: Issued by corporations, these unsecured debt instruments are used to fund corporate short-term financing requirements. If issued by a financially strong company, they have less risk.

c: These financial instruments are investment pools that buy such short-term debt instruments as Treasury bills (T-bills), certificates of deposit (CDs), and commercial paper. They can be easily liquidated.

d: 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.

2: 

Which of the following instruments are traded in the capital markets? Check all that apply.

Common stocks

Certificates of deposit

Corporate bonds

Treasury bills

Preferred stocks

3: A financial instrument whose value is derived from the value of an underlying asset is called a