Financial Instruments and Loan Types Quiz

Test your knowledge on financial instruments with questions about debt, loans, bonds, derivatives, and securities.

Practice Learn Test

Which of the following is considered a debt instrument?

Stock

Bond

Preferred Share

Common Share

Which of the following loan types typically has a fixed interest rate?

Adjustable-rate mortgage (ARM)

Variable-rate mortgage

Balloon mortgage

Fixed-rate mortgage

Which financial instrument represents ownership in a corporation?

Option

Futures contract

Common stock

Treasury bill

Which of the following is an example of a derivative instrument?

Certificate of deposit (CD)

Money market fund

Options contract

Corporate bond

What does the term 'amortization' refer to in the context of loans?

The process of obtaining a loan

The process of paying off a loan over time in regular installments

The process of transferring a loan to another borrower

The process of evaluating a borrower's creditworthiness

Which financial instrument is issued by the U.S. government and typically considered risk-free?

Corporate bond

Municipal bond

Treasury bond

Commercial paper

What is a mortgage-backed security (MBS)?

A type of equity instrument

A derivative instrument

A type of debt instrument

A real estate investment trust (REIT)

What is a callable bond?

A bond issued by a government entity

A bond that can be redeemed by the issuer before its maturity date

A bond with no fixed maturity date

A bond that pays variable interest rates

What is the primary purpose of a futures contract?

To facilitate the exchange of currencies

To provide insurance against price fluctuations

To guarantee a fixed income stream

To agree to buy or sell an asset at a predetermined price on a future date

#10

What is the key characteristic of an index fund?

Actively managed investment strategy

High-risk investment profile

Passively tracks the performance of a specific market index

Provides a guaranteed return

#11

Which of the following is a characteristic of a secured loan?

Requires no collateral

Has a higher interest rate compared to unsecured loans

Backed by assets that the borrower pledges as collateral

Typically has a longer repayment period

#12

What is the primary function of a money market fund?

Provide long-term capital growth

Offer guaranteed returns

Invest in high-risk securities

Provide short-term liquidity and safety of principal