$3.$ Financial instruments

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 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.

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 considered the most risky but provide higher expected returns.

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