Consider the following:1. Exchange-Traded Funds (ETF)2. Motor vehicles3. Currency swapWhich of the above is/are considered financial instruments?
✓ Correct answer: d) 1 and 3 only
ExplanationA financial instrument is a contractual agreement that creates a financial asset for one party and a correspond- ing financial liability or equity instrument for another party.Options 1 and 3 are correct :Exchange-Traded Funds (ETF) are considered financial instruments as they represent a portfolio of assets (stocks, bonds, or commodities) and are traded on stock exchanges.They are intangible assets that provide claims to future cash flows or ownership interests.A currency swap is a financial instrument used in international finance.It involves the exchange of principal and interest payments in different currencies between two parties, helping manage foreign exchange risks.Option 2 is incorrect : Motor vehicles are not financial in- struments.They are physical assets used for transportation and do not represent any contractual claim to future cash flows or monetary value in financial markets.299
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