FINANCIAL INSTRUMENT.docx - FINANCIAL INSTRUMENT Financial instruments are assets that can be traded or they can also be seen as packages of capital

FINANCIAL INSTRUMENT.docx - FINANCIAL INSTRUMENT Financial...

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FINANCIAL INSTRUMENT Financial instruments are assets that can be traded, or they can also be seen as packages of capital that may be traded. Most types of financial instruments provide efficient flow and transfer of capital all throughout the world's investors. These assets can be cash, a contractual right to deliver or receive cash or another type of financial instrument, or evidence of one's ownership of an entity. A financial instrument is a real or virtual document representing a legal agreement involving any kind of monetary value. 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. Investors in turn have investment objectives, which may be to increase wealth (capital growth) or to provide income. Some investors will have only one of these objectives, some will have both.
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