Question: 4. Financial instruments Aa Aa Financial instruments are assets that have a monetary value or record a monetary transaction. To coordinate the exchange of capital





4. 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 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 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. Issued by a nonfinancial firm, these financial instruments are guaranteed by a bank. There is less risk involved because of bank backing. 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 considered the most risky but provide higher expected returns
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