Civil Services Prep

Prelims 2024 · Economy · Question 84

Consider the following:

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

Which of the above is/are considered financial instruments?

  1. 1 only
  2. 2 and 3 only
  3. 1, 2 and 3
  4. 1 and 3 only

Answer

1 and 3 only

1. Exchange-Traded Funds (ETF): Correct. ETFs are market-traded investment products representing a basket of assets; they are recognized financial instruments/securities.

2. Motor vehicles: Incorrect. Motor vehicles are physical real assets/consumer goods, not financial instruments.

3. Currency swap: Correct. A currency swap is a derivative contract involving exchange of cash flows in different currencies, so it is a financial instrument.

Hence, 1 and 3 only are financial instruments.

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