Business Finance 12, Lesson 1.4 : Financial Instruments

an asset, that holds capital and can be created, liquidated, revised, and traded in the market

instruments whose value is directly established and perceived by the market

2 kinds of Cash Instruments

an agreement between parties

an asset to one party and a liability to the other

Types of Financial Instruments

fungible or interchangeable with other assets of similar value

• considered as cash instruments because they constitute monetary value

• exchanged through an agreement between the parties

• entitle the holder to have a part ownership of a publicly listed company

• offered through an IPO

• offered by companies and governments who need funds

• entitles the holder to get their money back with interest

Kinds of Bonds