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Financial Instruments 
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Wikipedia says that a "A Financial Instrument is a tradeable asset of any kind;
either cash, evidence of an ownership interest in an entity, or a contractual right to receive or deliver cash or another financial instrument".
A Financial Instrument can also be called a Security, and broadly categorized into :-
  • Debt Securities (such as banknotes, bonds and debentures)
  • Equity Securities e.g. common stocks
  • Derivative Contracts, such as Forwards, Futures, Options and Swaps.
    Categorization
     Financial instruments can be categorized by form depending on whether they are cash instruments or derivative instruments:
    
  • Cash instruments are financial instruments whose value is determined directly by the markets. They can be divided into securities, which are readily transferable, and other cash instruments such as loans and deposits, where both borrower and lender have to agree on a transfer.
  • Derivative instruments are financial instruments which derive their value from the value and characteristics of one or more underlying entities such as an asset, index, or interest rate. They can be divided into exchange-traded derivatives and over-the-counter (OTC) derivatives. Alternatively, financial instruments can be categorized by "asset class" depending on whether they are equity based (reflecting ownership of the issuing entity) or debt based (reflecting a loan the investor has made to the issuing entity). If it is debt, it can be further categorised into short term (less than one year) or long term. Foreign Exchange instruments and transactions are neither debt nor equity based and belong in their own category.


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