Which of the following statements best describes financial instruments?
A) All financial instruments are a means of payment.
B) Financial instruments can transfer resources between people but not risk.
C) Financial instruments can transfer resources and risk between people.
D) Financial instruments can transfer risk but not resources between people.

Question

Quizplus · Accepted Answer

Financial instruments are tools or contracts that can be traded or exchanged between parties, and they can transfer financial resources (such as money or assets) and risk (such as the risk of loss or default) between parties. Option A is incorrect because not all financial instruments are a means of payment (some financial instruments like options, futures, or warrants are not used as payment methods). Option B is incorrect because financial instruments can also transfer risk. Option D is incorrect because financial instruments can transfer both risk and resources.

Which of the Following Statements Best Describes Financial Instruments