Financial Asset

A Financial Asset is a financial resource that is an intangible economic asset that derives value from a contractual claim on future cash flows or ownership.

• Context:
• AKA: Financial Security Investment.
• Context:
  • It can (often) be associated with a Financial Transaction.
  • ...
  • It can range from being a Tradable Financial Asset to being an Non-Tradable Financial Asset.
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  • It can be categorized into Equity Securities, Debt Securities, and Derivatives, each representing different types of financial claims.
  • It can be owned by a Financial Investor, such as a Financial Asset Fund.
  • It can represent a claim on future cash flows or economic benefits.
  • It can be issued by governments, corporations, or other entities.
  • It can be subject to market risk, credit risk, and other financial risks.
  • It can be valued using various financial valuation methods.
  • It can be regulated by financial regulatory bodies to ensure market integrity and investor protection.
  • It can be used for various purposes including investment, speculation, hedging, and risk management.
  • It can be classified based on its liquidity, risk profile, maturity, or asset class.
  • It can generate income (e.g., interest, dividends) or capital gains.
  • It can be influenced by macroeconomic factors, company performance, and market sentiment.
  • It can be traded in financial markets, including stock exchanges, bond markets, and over-the-counter markets.
  • It can be part of a broader investment portfolio and contribute to portfolio diversification.
  • It can be analyzed using fundamental analysis, technical analysis, or other investment analysis techniques.
  • It can be subject to taxation, with different tax treatments depending on the type of asset and jurisdiction.
  • ...
• Example(s):
  • Equity Securities:
    • Common Stocks: Represent ownership in a corporation
    • Preferred Stocks: Hybrid securities with characteristics of both stocks and bonds
  • Debt Securities:
    • Government Bonds: Issued by national governments
    • Municipal Bonds: Issued by local governments
    • Corporate Bonds: Issued by corporations
    • Treasury Bills: Short-term government securities
  • Derivatives:
    • Options: Contracts giving the right to buy or sell an asset
    • Futures: Contracts to buy or sell an asset at a predetermined price
    • Swaps: Agreements to exchange cash flows
  • Money Market Instruments:
    • Commercial Paper: Short-term unsecured promissory notes
    • Certificate of Deposit: Time deposits with a specified maturity
  • Investment Funds:
    • Mutual Funds: Professionally managed investment pools
    • Exchange-Traded Funds (ETFs): Funds traded on stock exchanges
    • Hedge Funds: Alternative investment funds
  • Insurance Products:
    • Life Insurance Policies: Contracts providing death benefits
    • Annuities: Contracts providing regular payments
  • Cryptocurrencies: Digital or virtual currencies using cryptography
  • Accounts and Other Claims:
    • Bank Accounts: Deposits held at financial institutions
    • Accounts Receivable: Claims against customers for unpaid invoices
  • ...
  • a Bank Deposit.
  • a Bond Security.
  • an Equity Security.
  • ...
• Counter-Example(s):
  • Tangible Economic Assets, such as:
    • Real Estate: Physical property, which is a real asset rather than a financial asset
    • Commodities: Physical goods like gold, oil, or agricultural products
    • Business Equipment: Machinery or tools used in business operations
    • Infrastructure: Physical assets like roads, bridges, or utilities
    • Inventory: Goods held for sale in the ordinary course of business
    • Vehicles: Cars, trucks, or other transportation equipment
    • Natural Resources: Unexploited minerals, forests, or water resources
    • Collectibles: Items like art, antiques, or rare coins, when held primarily for investment
  • Intangible Non-Financial Assets, such as:
    • Intellectual Property: Patents, copyrights, or trademarks
    • Human Capital: An individual's knowledge, skills, and abilities
    • Goodwill: The value of a company's brand name, customer base, and reputation
    • Software: Computer programs and applications (when not held as investments)
    • Data: Databases or customer information (when not considered financial assets)
    • Licenses and Permits: Government-granted rights to conduct specific activities
    • Research and Development results: Innovations or discoveries not yet patented
    • Organizational Capital: Business processes, organizational structures, and corporate culture
  • ...
• See: Brokerage Account, Financial Market, Financial Reporting Standard.

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References

2014

• (Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/financial_asset Retrieved:2014-6-1.
  • A financial asset is an intangible asset that derives value because of a contractual claim. Examples include bank deposits, bonds, and stocks. Financial assets are usually more liquid than tangible assets, such as land or real estate, and are traded on financial markets. According to the International Financial Reporting Standards (IFRS), a financial asset is defined as one of the following: * Cash or cash equivalent; * Equity instruments of another entity; * Contractual right to receive cash or another financial asset from another entity or to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity; * Contract that will or may be settled in the entity's own equity instruments and is either a non-derivative for which the entity is or may be obliged to receive a variable number of the entity's own equity instruments, or a derivative that will or may be settled other than by exchange of a fixed amount of cash or another financial asset for a fixed number of the entity's own equity instruments.

2013

• http://www.investopedia.com/terms/f/financialasset.asp
  • QUOTE: An asset that derives value because of a contractual claim. Stocks, bonds, bank deposits, and the like are all examples of financial assets. …

    … Unlike land and property -- which are tangible, physical assets--financial assets do not necessarily have physical worth.

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