Financial Instruments: Types and Characteristics
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Questions and Answers

A financial instrument has a monetary value and is traded on the ______ market.

stock

A ______ is a financial instrument that has monetary value and is traded on the stock market.

security

Derivative instruments have values determined from ______ assets.

underlying

A ______ is a contract between two parties that involves customizable derivatives.

<p>forward</p> Signup and view all the answers

Both ______ and loans are considered cash instruments.

<p>deposits</p> Signup and view all the answers

Financial instruments are contracts for monetary ______ that can be purchased, traded, created, modified, or settled.

<p>assets</p> Signup and view all the answers

An ______ is an agreement between two parties in which the seller grants the buyer the right to purchase or sell a certain number of derivatives at a predetermined price for a specific period.

<p>option</p> Signup and view all the answers

A ______ is a derivative agreement between two parties that involves the swapping of interest rates where each party agrees to pay other interest rates on their loans in different currencies.

<p>swap</p> Signup and view all the answers

CURRENCY AGREEMENTS categories include ______, outright forwards, and currency swap.

<p>spot</p> Signup and view all the answers

DEBT-BASED FINANCIAL INSTRUMENTS are categorized as mechanisms that an entity can use to increase the amount of ______ in a business.

<p>capital</p> Signup and view all the answers

EQUITY-BASED FINANCIAL INSTRUMENTS are categorized as mechanisms that serve as legal ______ of an entity.

<p>ownership</p> Signup and view all the answers

FOREIGN EXCHANGE INSTRUMENTS are financial instruments that are represented on the foreign market and primarily consist of ______ agreements and derivatives.

<p>currency</p> Signup and view all the answers

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