financial assets is a claim against the income or wealth of a business firm, household or unit of government represented usually by a certificate, receipt or other legal contested and usually created by the lending of money . example , socks, bond ,policies, deposit in bank etc.
characteristics
1. financial assets promise future returns to their owner
2. it serves as a store of value
3. physical location is not relevant in determine their market value therefore cost of transportation and storage is low
4. financial assets are fungible
kinds or types
financial assets generally fall in to three categories.
1. money 2. equities 3. debt securities
1. any financial asset that is generally accepted in payment for purchases of goods and service is money. example: checking account, currency and coins.
2. equity represents ownership shares of a business firm we can divide equities into common stock and preferred stock.
3. debt securities entitle their holders to a priority claim or over the holder of equities to the asserts and income of an individual, business firm and unit of government usually, that claims is fixed in amount and time and depending on the terms of the contract.
