Free NASAA Series 65 (Uniform Investment Adviser Law Examination) Investment Vehicle Characteristics Practice Questions

Choice A is incorrect because U.S. Treasury obligations are issued by the federal government, not corporations, and Treasury notes and bonds are not short-term.
Choice D is correct because commercial paper is an unsecured, short-term debt instrument (typically maturing in 1 to 270 days) issued by corporations with strong credit ratings to meet short-term financing needs. It is sold at a discount and is a key money market instrument.
Choice B is incorrect because certificates of deposit are issued by banks and may be FDIC-insured; commercial paper is corporate and unsecured.
Choice C is incorrect because a municipal general obligation bond is a long-term debt instrument backed by the taxing power of a government entity, which is unrelated to commercial paper.

Choice B is correct because demand deposits (such as checking accounts) allow the depositor to withdraw funds on demand — that is, at any time without advance notice to the bank. This distinguishes them from time deposits.
Choice A is incorrect because a deposit that pays a fixed rate until maturity and requires a holding period describes a certificate of deposit (CD), not a demand deposit.
Choice C is incorrect because short-term corporate debt obligations describe commercial paper, a money market instrument, not a bank deposit product.
Choice D is incorrect because demand deposits have no mandatory holding period; the description of a government-backed instrument with a minimum holding period more closely resembles a Treasury bill.

Choice A is correct because a futures contract creates a legally binding obligation for both the buyer and the seller to transact the underlying asset at the agreed price on the settlement date. Neither party has the option to walk away — both are obligated.
Choice B is incorrect because a right but not an obligation describes an options contract, not a futures contract. Options give the holder the choice to exercise; futures do not.
Choice C is incorrect because a bond combined with an equity option describes a warrant or a convertible bond, not a futures contract. Futures are standalone derivative contracts based on commodities, indexes, currencies, or rates.
Choice D is incorrect because an unsecured debt instrument linked to an index describes an exchange-traded note (ETN), not a futures contract. ETNs are credit instruments; futures are exchange-traded derivative obligations.