What financial instruments are included in equities?

Equities typically refer to ownership interests in a company, and the correct answer encompasses a broader range of financial instruments that fall under this category. Preferred stock represents equity in a company but often carries certain privileges over common stock, such as fixed dividends. Additionally, exchange-traded funds (ETFs) are investment funds that are traded on stock exchanges, similar to stocks, and can contain a diversified portfolio of equities, including common and preferred shares.

Contracts for difference (CFDs), while not direct ownership of shares, still relate closely to equity markets by allowing traders to speculate on price movements of underlying stocks or indices without actually owning the assets. Therefore, the inclusion of preferred stock and ETFs, along with their associated instruments like CFDs, accurately captures the essence of what constitutes equities and demonstrates an understanding of the broader equity market.

This highlights the diversity within the equities category, as it not only encompasses traditional stock ownership but also newer financial products that facilitate participation in equity markets.