financial instruments
Monetary contract types
Financial instruments are contracts that create financial assets for one party and liabilities for another.
The term covers a broad range: stocks, bonds, loans, derivatives, currencies, and more exotic creations.
Banks and investment firms trade in financial instruments; regulators monitor them.
The crash exposed how few people understood the financial instruments they were selling.
Available courses of action
- futuresContracts for future delivery
- swapsMutual trades
- forwardsToward what lies ahead
- call optionRight to buy at set price
put option · strike price · expiry · premium · contract · warrants · caps · floors
Ownership stakes or inventory
- sharesUnits of company ownership
- common stockBasic corporate ownership units
- preferred stockPriority-claim corporate ownership
- dividendsProfits paid to shareholders
capital gains · shareholder · ownership · voting rights · stock market · IPO · stock exchange · market capitalization
Ties that unite
- loansBorrowed money arrangements
- mortgagesLoans secured by property
- debenturesUnsecured corporate debt instruments
- notesBrief written records
certificates of deposit · credit · principal · interest · coupon · maturity · amortization · yield
Marketable bundled securities
- mutual fundsCollectively managed securities portfolios
- index fundsSecurities mirroring market indices
- money market fundsPooled short-term debt investments
- government securitiesState-backed debt instruments
Identifying and minimizing threats
- hedgeBoundary of planted shrubs
- straddleSit with legs spanning
- strangleConstrict the throat
- diversificationExpanding into varied areas
options
Available courses of action
call option · put option · strike price · expiry · premium · contract · warrants · caps · floors · credit default swaps
stocks
Ownership stakes or inventory
- sharesUnits of company ownership
- common stockBasic corporate ownership units
- preferred stockPriority-claim corporate ownership
dividends · capital gains · shareholder · ownership · voting rights · stock market · IPO · stock exchange · market capitalization · book value
bonds
Ties that unite
- loansBorrowed money arrangements
- mortgagesLoans secured by property
- debenturesUnsecured corporate debt instruments
notes · certificates of deposit · credit · principal · interest · coupon · maturity · amortization · yield · default
exchange-traded funds
Marketable bundled securities
- mutual fundsCollectively managed securities portfolios
- index fundsSecurities mirroring market indices
- money market fundsPooled short-term debt investments
government securities · savings bonds · securitization · tranches · pass-through
risk management
Identifying and minimizing threats
forex
Currency trading market
pound · rupee · peso · yuan · franc · exchange rate · fiat · banknotes · coins · reserve currency
- financebank, CFO, banks, controller, treasurer
- accountingbookkeeping, ledger, balance sheet, general ledger, accounts payable
- investingstocks, stock, bonds, investing, investor
- investing termsstocks, bonds, ETFs, gold, commodities
- investmentsbonds, stocks, securities, investment, equities
- EU Fundingfunding allocation, technical assistance, absorption rate, research funding, business grants
financial instrumentstangible assets
Ownable items with substance
commodities · real property · raw materials · real estate · precious metals
financial instrumentsconsumer goods
Products bought by individuals
consumables · means of production · finished goods · labor · human capital
financial instrumentsbarter
Direct goods-for-goods exchange
cash transactions · gift economy · mutual aid · subsistence economy · shadow economy
finance, instrument, finances, financial, financing, financed, refinance, nonfinancial, refinancing