An asset is anything of value owned by a person or business. A financial asset is a financial claim, an intangible asset that derives its value from a contractual claim. It simply means a claim on someone else to pay you money. Financial assets include cash and bank accounts as well as securities and investment accounts that can be easily converted into cash.
For example, your savings bank account with the bank is a financial asset because it represents a claim you have on a bank to pay you an amount of money equal to the monetary value of your account. Financial assets can be divided into securities tradable on a financial market and other financial assets. Financial markets are places or channels for buying and selling stocks, bonds and other securities, such as the New York Stock Exchange or the National Stock Exchange (NSE India).
Other examples include bank deposits, bonds and stocks. Financial assets are generally more liquid than tangible assets, such as land or real estate, and are traded on financial markets.
Types of financial assets:
Below are different types of financial assets:
- Silver: Cash or near-cash;
- Shares: Equity instruments of another entity;
- Contract law receive cash or another financial asset from another entity;
- Obligations
- exchange
- Securitized loans
We will now briefly discuss these main financial assets.
1. Money:
Money is a medium of exchange, an agreed system for measuring the value of goods and services. Anything that has an agreed value can be a medium of exchange. Today, many forms of currency are used. Money is any object or document generally accepted as a means of payment for goods and services and repayment of debts in a given socio-economic context or country.
Money is anything people are willing to accept in payment for goods and services or to pay off debts. Money supply is the total amount of money in the economy.
Anything that has an agreed value can be a medium of exchange. Today, many forms of currency are used. Money is any object or document generally accepted as a means of payment for goods and services and repayment of debts in a given socio-economic context or country.
2. Shares:
Also known as stocks, shares, or equity investments, generally refers to the purchase and holding of stocks on a stock market by individuals and companies in anticipation of dividend income and capital gains. in capital as the value of the stock increases. These securities represent partial ownership of a company. When you buy shares of a large company like Facebook, you become a shareholder of that company and you own a portion of that company’s equity, albeit a tiny portion, as the company may have issued millions of shares.
As a stock owner in a company, you have a legal right to a share of the company’s assets and a share of its profits, if any. Companies keep part of their profits as retained earnings and pay the rest to shareholders in the form of dividends, which are payments companies typically make quarterly.
3. Duties:
In finance, a bond is an instrument of indebtedness of the issuer of the bond towards the holders. When you buy a bond issued by a company or government, you are lending the company or government a fixed amount of money. It is a debt security, under which the issuer has a debt towards the holders and, according to the terms of the obligation, is obliged to pay them interest (the coupon) and/or to reimburse the principal at a later date, called maturity. .
The interest rate is the cost of borrowing funds (or payment for loan funds), usually expressed as a percentage of the amount borrowed. Interest is generally payable at fixed intervals (semi-annual, annual, sometimes monthly). Very often, the bond is negotiable, that is, the ownership of the instrument can be transferred on the secondary market.
Bonds and stocks are both securities, but the main difference between the two is that shareholders have a stake in the company (i.e. they own it), while stockholders bonds have a creditor stake in the business (i.e. they are lenders). Another difference is that bonds usually have a set term or maturity, after which the bond is redeemed, while stocks can be outstanding indefinitely.
When a bond matures, the seller of the bond repays the principal. A bond that matures in one year or less is a short-term bond. A bond with a maturity of more than one year is a long-term bond. Bonds can be bought and sold in financial markets, so like stocks, bonds are securities.