Which financial instrument is NOT typically associated with fixed income?

Which financial instrument is NOT typically associated with fixed income?

• A. Bonds
• B. Money market instruments
• C. Equity shares
• D. Preferred stocks

Answer: (C)

Fixed income instruments are characterized by the return of a fixed or predetermined amount of income, typically in the form of interest payments, over a specified period. In this context, equity shares are not a fixed income instrument because they represent ownership in a company rather than a promise to pay a fixed amount of interest. Instead, equity shareholders may receive dividends, which can vary in amount and frequency, depending on the company's performance and decisions made by its board of directors. In contrast, bonds, money market instruments, and preferred stocks are associated with fixed income characteristics. Bonds provide regular interest payments, money market instruments are short-term investments that often yield fixed interest, and preferred stocks typically offer fixed dividends. Therefore, equity shares do not fit within the fixed income category, making them the correct choice.

Fixed income instruments are characterized by the return of a fixed or predetermined amount of income, typically in the form of interest payments, over a specified period. In this context, equity shares are not a fixed income instrument because they represent ownership in a company rather than a promise to pay a fixed amount of interest. Instead, equity shareholders may receive dividends, which can vary in amount and frequency, depending on the company's performance and decisions made by its board of directors. In contrast, bonds, money market instruments, and preferred stocks are associated with fixed income characteristics. Bonds provide regular interest payments, money market instruments are short-term investments that often yield fixed interest, and preferred stocks typically offer fixed dividends. Therefore, equity shares do not fit within the fixed income category, making them the correct choice.