Financial Asset Categories

C

The three broad categories of financial assets are: Debt, Equity, and Money Market Securities.

Debt securities are financial instruments representing an obligation of the issuer to repay the principal amount of the security to the investor, along with interest or other periodic payments, over a specified time period. Examples of debt securities include bonds, notes, and certificates of deposit.

Equity securities, on the other hand, represent ownership in a company or other entity, giving investors a share of the profits and losses of the business. Examples of equity securities include common and preferred stocks.

Money market securities are short-term debt instruments that are highly liquid and have low risk. They are typically issued by government entities, financial institutions, or corporations with strong credit ratings. Examples of money market securities include Treasury bills, commercial paper, and certificates of deposit.

Option B is incorrect because corporate securities and derivatives are specific types of financial assets that fall within the broader categories of debt and equity.

Option C is incorrect because derivatives are a type of financial instrument that can be used to manage risk, but they do not represent a separate category of financial assets.

Option D is incorrect because long-term debt is a specific type of debt security and is not a separate category of financial assets.

Therefore, the correct answer is option A - Debt, equity, and money market securities.