Financial Markets

1. Which of the following is an option?

A security representing an ownership stake in a corporation that entitles its holder to vote on corporate matters and, in some cases, receive direct distributions of funds
A contract between two counterparties that gives one party the right, but not the obligation, to buy/sell an asset at a pre-agreed price on a particular date
A security that promises to pay periodic payments to the security holder and to repay principal upon maturity
An agreement between two counterparties to sell an asset at a pre-agreed price on a particular date

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Governments/sovereigns represent the most important supply of financing in securities markets.
Equity finance represents ownership, but debt finance does not.
A futures contract can be decomposed into a series of separate OTC forward contracts.
Most FX transactions are generated by cross-border trade between corporates.

Nonfinancial corporate bond issuance is less than that of the government sector.
Emerging markets focus more on equity financing than debt financing.
Most FX and bond trading is conducted on exchanges.
Governments raise funds by selling commercial paper (CP) or certificates of deposit (CDs).