Financial instruments may be divided into two types:
cash instruments and derivative instruments
. Financial instruments may also be divided according to an asset class, which depends on whether they are debt-based or equity-based. Foreign exchange instruments comprise a third, unique type of financial instrument.
What are basic financial instruments?
Basic financial instruments are defined as one of the following:
cash
.
a debt instrument
(such as accounts receivable and payable) commitment to receive a loan that satisfy certain criteria. investments in non-convertible preference shares, and non puttable ordinary shares.
Which of the following is a financial instrument?
Most financial instruments fall into one or more of the following five categories:
money market instruments
, debt securities, equity securities, derivative instruments, and foreign exchange instruments.
What are the best financial instruments?
- Fixed Deposit: FDs provide assured returns at fixed intervals. …
- Mutual Funds: Your funds are invested in stocks and equities through a mutual fund manager. …
- Stocks Investment: This instrument for investment is for investors with high-risk appetite.
What are various financial instruments?
- Cash Instruments.
- Derivative Instruments.
- Debt-Based Financial Instruments.
- Equity-Based Financial Instruments.
What are the three types of financial instruments?
There are typically three types of financial instruments:
cash instruments, derivative instruments, and foreign exchange instruments
.
How many types of financial services are there?
Individual Banking (checking accounts, savings accounts, debit/credit cards, etc.)
Business Banking (merchant services, checking accounts and savings accounts for businesses, treasury services, etc.) Loans (business loans, personal loans, home loans, automobile loans, working-capital loans, etc.)
Is gold a financial instrument?
Is monetary gold a financial instrument (like cash)? No. Similar to gold bullion,
monetary gold is not a financial instrument
as there is no contractual right to receive cash or another financial asset inherent in the item.
Is debt a financial instrument?
Any type of
instrument
primarily classified as debt can be considered a debt instrument. … Debt instruments provide capital to an entity that promises to repay the capital over time. Credit cards, credit lines, loans, and bonds can all be types of debt instruments.
Is a loan a financial instrument?
Financial instruments are
monetary contracts between parties
. … They can be cash (currency), evidence of an ownership interest in an entity or a contractual right to receive or deliver in the form of currency (forex); debt (bonds, loans); equity (shares); or derivatives (options, futures, forwards).
What is the difference between financial assets and financial instruments?
Financial instruments refer to a contract that generates a financial asset to one of the parties involved, and an equity instrument or financial
liability
to the other entity. … Financial assets can be categorized as either current or non-current assets on a company’s balance sheet.
What is the importance of financial instrument?
Financial Instruments are intangible assets, which are
expected to provide future benefits in the form of a claim to future cash
. It is a tradable asset representing a legal agreement or a contractual right to evidence monetary value / ownership interest of an entity.
Which financial instrument is the most liquid?
1.
Cash
, bank accounts, and CDs: Cash is the most liquid asset there is.
How can I double my money in 5 years?
Let’s apply Thumb rule in a reverse way, if you wish to double your money say in 5 years, then you will have to
invest money at the rate of 72/5 = 14.40% p.a.
to achieve your target. This means you have to invest money in those financial products that will give you a return at 14.40% per annum.
What are the 6 types of mutual funds?
- Money Market Funds. Money market funds invest in short-term fixed-income securities. …
- Fixed Income Funds. Fixed income funds buy investments that pay a fixed rate of return. …
- Equity Funds. Equity funds invest in stocks. …
- Balanced Funds. …
- Index Funds. …
- Specialty Funds.
What is the safest investment with the highest return?
- Investment #1: High-Yield Savings Account.
- Investment #2: Certificates of Deposit (CDs)
- Investment #3: High-Yield Money Market Accounts.
- Investment #4: Treasury Securities.
- Investment #5: Government Bond Funds.
- Investment #6: Municipal Bond Funds.
