Final answer:
Bonds are financial contracts for borrowing capital with interest, with variations like zero coupon and floating rate bonds. Depository and non-depository institutions offer different financial services, while money markets and mutual funds provide investment opportunities. Forward and futures contracts, as well as call and put options, are financial instruments used for hedging and investment.
Step-by-step explanation:
A bond is a financial contract through which a borrower like a corporation, a city or state, or the federal government agrees to repay the amount that it borrowed along with an interest rate over a future period of time. A zero coupon bond is a type of bond issued at a discount and repaid at the face value, representing the bond's interest (E). A floating rate bond (I) is a bond whose interest rate fluctuates with shifts in the general level of interest rates. Depository institutions, such as commercial banks (G), accept and manage deposits and make loans, whereas non-depository institutions (D) like insurance companies do not accept deposits but may provide other financial services.
Money markets deal with the trading of funds for a maximum period of one year (F), often through instruments like certificate of deposit (CD), while mutual funds are open-end funds (B) that pool resources from many investors to purchase a diversified portfolio of assets. Forward contracts (C) are customized and not standardized agreements to buy or sell an asset at a stipulated future date, unlike futures contracts (A), which are standardized and traded on organized exchanges.
Call options (I) give the buyer the right, but not the obligation, to purchase an underlying asset at a specified price by a certain date, while put options (J) confer the right to sell the asset under similar terms. These financial instruments provide mechanisms for investment, hedging, and speculation with varying degrees of risk and return.