Debt Markets are markets where which instruments are issued and traded?

• A. Debt instruments
• B. Equity instruments
• C. Currencies
• D. Mortgage instruments

Answer: (A)

Debt markets are markets where debt securities are issued and traded. Borrowers such as governments or corporations raise funds by issuing instruments like bonds, notes, bills, and commercial paper, and investors buy these to earn interest and be repaid at maturity. Prices and yields move in opposite directions, with longer maturities typically carrying higher yields to compensate for additional risk, while credit quality and liquidity shape pricing. This activity is distinct from equity markets, which deal with stocks representing ownership, and from currency markets, which handle foreign exchange. Mortgage instruments are a type of debt instrument tied to real estate, and while they can be traded in debt markets (as mortgage-backed securities), the broad market category is debt instruments.