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Bookmarks People Window Help Apl: Student Question x tps://courses.aplia.com/af/servlet/quiz?quiz action-takeQuiz&quiz; pro bGuid-QNAPCOA8010100000041ca25700600008 Aa Aa 3. Financial instruments Financai 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 folowing descriptions. Description Financial Instrument Backed by the U.S. govenment, these financial instruments are short-term debt obligations with a maturity of less than one year. They are considered risk-free investments 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. 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 fund their ong-term financing requirements Which of the following are money market instruments? Check all that apply. Eurodollar time deposits Long-term bank loans common stocks Corporate bonds Treasury bills The process in which derivatives are used to reduce risk exposure is called 9

Explanation / Answer

1. Treasury Bills

2. EuroDollar Time deposit

3. Global Depository Receipt (GDR)

4. Corporate Bonds

Money market instruments are:

- Treasury Bills

- Euro Dollar time deposits

The process in which derivatives are used to reduce risk exposure is called "Hedging"

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