gs1medium

Consider the following:

  1. 1.Exchange-Traded Funds (ETF)
  2. 2.Motor vehicles
  3. 3.Currency swap

Which of the above is/are considered financial instruments?

  1. A.1 only
  2. B.2 and 3 only
  3. C.1, 2 and 3
  4. D.1 and 3 only
▶ Answer & Explanation

Correct answer: D. 1 and 3 only

Financial instruments are monetary contracts between parties. Exchange-Traded Funds (ETFs) represent a basket of securities and are traded on exchanges, making them financial instruments. Currency swaps involve exchanging principal and interest in different currencies, also fitting the definition of a financial instrument. Motor vehicles, however, are tangible physical assets, not financial contracts.

Source: UPSC gs1 2024

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