An equity instrument is defined as:

Question

Quizplus · Accepted Answer

An equity instrument is any contract that represents a residual interest in the assets of an entity after deducting all of its liabilities. This includes common stocks and other ownership interests in an entity. A is incorrect because it describes a generic definition of any asset or security that can be bought or sold. B describes a share or stock certificate, which is one type of equity instrument but not the definition of the broader term. D describes a derivative financial instrument, which is a separate category of financial instruments from equity instruments.

An Equity Instrument Is Defined As