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 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.
These financial instruments are contractual agreements that give one party a long-term agreement to use an asset, by providing regular payments.

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

Treasury bills

Common stocks

Negotiable certificates of deposit

Long-term bank loans

Bankers acceptances

The process through which savings and loan associations (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 .