Financial Instruments and Obligations Quiz

Corporate bond represents a loan to a corporation, typically offering periodic interest payments and the return of principal at maturity.

Stock certificate represents ownership in a corporation and does not derive its value from another underlying asset.

Bonds typically have a fixed maturity date when the principal amount is repaid to the bondholder.

Fixed-income securities provide regular interest payments to the holder, typically at a predetermined rate.

Stocks represent ownership in a corporation, while bonds represent loans provided by investors to the issuing entity.

Futures contract allows parties to lock in prices for future transactions, mitigating price volatility.

Options provide the right but not the obligation to buy or sell an underlying asset at a predetermined price.

Call options allow the holder to buy assets at a specified price, while put options allow selling assets at a specified price.

Derivative is a financial instrument whose value is based on the performance of an underlying asset, index, or entity.

MBS pools together mortgages, which are then sold to investors as securities, providing a stream of income from the underlying mortgages.

Convertible bonds allow bondholders to convert their bonds into a predetermined number of shares of the issuing company's common stock.

CDS provides protection to the buyer against the default of a borrower or issuer of debt.