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Which of the following is an example of a financial instrument?a.Carb.Patentc.Treasury billd.Computer software

Question

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

  • a. Carb.
  • b. Patent
  • c. Treasury bill
  • d. Computer software
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Solution

The correct answer is c. Treasury bill. A Treasury bill (or T-bill) is a short-term debt obligation backed by the U.S. government with a maturity of less than one year, sold in denominations of 1,000uptoamaximumpurchaseof1,000 up to a maximum purchase of 5 million. T-bills have various maturities and are issued at a discount from par. When they mature, the government pays the holder the full par value. This is considered a financial instrument because it is a tradable asset of any kind; it can be cash, evidence of an ownership interest in an entity, or a contractual right to receive or deliver cash or another financial instrument.

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