Financial Instrument State and local government bonds Description 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 money-centered financial firms, these short- or medium-term insured debt instruments pay higher interest than a regular savings account. They are low-risk instruments and have low returns. Certificates of deposit Money market mutual funds 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. Commercial paper Consumer credit Which of the following are money market instruments? Check all that apply. Certificates of deposit Long-term bank loans O Corporate bonds O Preferred stocks O Commercial paper A financial instrument whose value is derived from the value of an underlying asset is called a derivative