TYPES OF ASSETS 

 

Financial Assets: Liquid assets deriving their value from ownership, a claim or a legal right. In many cases, the legal form of ownership is separated from the asset itself into a transferable legal form or title, which can be bough or sold by market participants. Examples include stocks, bonds, currencies, commodities, options on any of the preceding.

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Securities: Financial assets whose value depends on or is secured by a claim, right or security that depends on the performance and activities of others. They include most types of financial assets but exclude some, such as currencies and commodities. Legal definitions of securities can be complex and have legal and regulatory implications beyond the scope of this site.

 

Commodities: Assets that share identical characteristics with other assets of the same type. They are generic and interchangeable in nature. Examples include metals (precious and industrial), energy commodities (oil, gas, electricity, etc.)  agricultural commodities (grains, meats, fruits) and industrial materials (chemicals, earths and sands, etc.).

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Currencies: Legal tender of a country or jurisdiction. They include  “hard currencies” like the Euro, the Yen, the United States Dollar (USD) and other G7 currencies, smaller developed countries currencies, and currencies from emerging markets countries.

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Foreign Exchange: The price of one currency in terms of another currency. Quoted as a price of units of one currency in one of the two currencies in the pair (e.g US dollars per 1 British pound), but traded in a two-way market (e.g. buy dollars and sell pounds; or sell dollars and buy pounds), where each party in the exchange transaction delivers one currency and receives the other currency.

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Equities: Securities tied to the residual value of a firm after all its debts and obligations are covered. In bankruptcy, the last group to be paid out of the assets of a firm is the equity holders. Usually traded as shares, which split the ownership of a company into fractions owned by their holders. They are also limited liability assets, as they do not transfer obligations of the firm to equity holders.

  

Debt Securities: Assets backed by a repayment promise from an issuer, originated in a borrowing transaction. Common types are US Treasuries, (US Federal Government debt), loans, government bonds, corporate bonds and money market debt instruments.

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Debt securities and markets are referred to as fixed income, as they have a defined schedule of payments. In the context of a corporation, debt securities are a senior claim to equity securities. In bankruptcy debt holders are paid before equity holders.