Which one of the following is not a financial instrument?
A)Commitments to pay dividends
B)Commitments to guarantee indebtedness of third parties
C)Commitments to provide financing to customers
D)Financial arrangements designed to reduce risks

Question

Quizplus · Accepted Answer

While commitments to pay dividends are related to financial matters, they are not considered a financial instrument. Financial instruments include items such as stocks, bonds, derivatives, and loans. Commitments to guarantee indebtedness of third parties and commitments to provide financing to customers are both examples of financial instruments, as they involve the transfer of money or risk. Financial arrangements designed to reduce risks are also financial instruments, such as hedging strategies and insurance policies.

Which One of the Following Is Not a Financial Instrument