3. Financial instruments Aa Aa 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 inancial 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 Financial Instrument 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 State and local government bonds Issued by money-centered financial firms, these short- or Certificates of deposit medium-term insured debt instruments pay higher interest than a regular savings account. They are low-risk instruments and have low returns 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 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 Money market mutual funds Preferred stocks Which of the following are money market instruments? Check all that apply Corporate bonds Common stocks Preferred stocks X Commercial paper