21. Convertible bonds are an example of a capital market instrument that gives investors the option to:
a) Exchange the bond for company stock
b) Convert the bond into a preferred stock
c) Receive a higher interest rate after a certain time period
d) Sell the bond on a secondary market
22. Capital market instruments are primarily traded on:
a) Stock exchanges
b) Banks
c) Hedge funds
d) Mutual funds
23. Securitization is a process that involves transforming:
a) Debt instruments into equity instruments
b) Stocks into bonds
c) Illiquid assets into marketable securities
d) Foreign currency into domestic currency
24. Government bonds are often considered low-risk investments because they are backed by:
a) Corporate assets
b) Stock market indices
c) Central bank reserves
d) Taxpayer funds
25. Which of the following is a type of capital market instrument that pays periodic interest payments?
a) Zero-coupon bond
b) Treasury bill
c) Commercial paper
d) Corporate bond
