Financial instrument

Financial instruments can be tangible items or representative virtual documents representing a legal agreement involving any kind of monetary value. Financial instruments may also be divided according to an asset class, which depends on whether they are debt-based or equity-based. These assets can be cash, collateral and/or vouchers to establish a contractual right to deliver or receive any/all instruments as evidence/record of the attributed value and status of ownership.

Types of Financial Instruments

Financial instruments may be divided into two types: cash instruments and derivative instruments. Foreign exchange instruments comprise a third, unique type of financial instrument.