UPSC Previous Year Question | Prelims GS | 2024

Consider the following: 1. Exchange-Traded Funds (ETF) 2. Motor vehicles 3. Currency swap Which of the above is/are considered financial instruments?

  1. 1 only
  2. 2 and 3 only
  3. 1, 2 and 3
  4. 1 and 3 only

Answer

Correct Answer

1 and 3 only

Explanation

An Exchange-Traded Fund is a financial instrument representing an investment in a basket of assets and traded on an exchange. A currency swap is also a financial derivative contract involving the exchange of cash flows or currencies under agreed terms. A motor vehicle is a physical asset or tangible good, not itself a financial instrument. Hence, only 1 and 3 are correct.

Topics: etfs and derivative contracts, financial instruments, financial markets, indian economy