Five (5) financial instruments used by

financial institutions.

Cash

~ Equity represents ownership in a

company and can be in a form of common
stock or preferred stock. By issuing equity,
businesses can raise capital form investors
in exchange for a sale of ownership in the
company.

~ Bank Loans : businesses often rely on

bank loans as a common fom of financing to
fund their operations, investments, or
expansion plans. These loans come with
predefined terms, interest rates, and
rerpayment schedules.
~ Accounts Receivable is money owed to
a company by its customers for goods or
services provided on credit. Businesses can
use accounts receivable as a financial
instrument by selling them to a third party
at a discount through a process known as
factoring, to access immediate cash flow.

~ Commercial Paper is a short-term debt

instrument issued by companies to raise
funds for various operating expenses.
Commercial paper typically has a maturity
of less than a year and is considered a cost-
effective way for businesses to borrow
money quickly.

~Derivatives are financial instruments

whose value derived from an index,
underlying asset, or a rate. Businesses use
derivatives to hedge against various risks,
such as interest rate, fluctuations, currency
exchange rate fluctuations, or commodity
price changes. Common types of derivatives
includes options, futures and swaps.
 Economic Assignment

Name: Shakeida Alder

Class: Grade 10 Business