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

A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Exchange-Traded Funds (ETFs) are pooled investment securities traded on stock exchanges and are clearly financial instruments. Currency swaps are derivative contracts involving exchange of principal and interest payments in different currencies and are well-recognized financial instruments. Motor vehicles, however, are physical (tangible) assets — they are not financial instruments because they do not represent a contractual right to receive cash or another financial asset. Hence only 1 and 3 qualify.