Financial instrument

Financial instruments are cash, evidence of an ownership interest in an entity, or a contractual right to receive, or deliver, cash or another financial instrument.

1 Categorization
2 Matrix Table
3 Measuring Financial Instrument's Gain or Loss
4 See also
5 External links

Categorization

Financial instruments can be categorized by form depending on whether they are cash instruments or derivative instruments:

Cash instruments are financial instruments whose value is determined directly by markets. They can be divided into securities, which are readily transferable, and other cash instruments such as loans and deposits, where both borrower and lender have to agree on a transfer. A security is a Fungible, Negotiable instrument representing financial value A loan is a type of Debt. This article focuses exclusively on monetary loans although in practice any material object might be lent A deposit account is a current account at a Banking institution that allows money to be deposited and withdrawn by the account holder with the transactions and resulting balance
Derivative instruments are financial instruments which derive their value from the value and characteristics of one or more underlying assets. Derivatives are Financial instruments whose values depend on the value of other underlying financial instruments They can be divided into exchange-traded derivatives and over-the-counter (OTC) derivatives. Derivatives are Financial instruments whose values depend on the value of other underlying financial instruments Derivatives are Financial instruments whose values depend on the value of other underlying financial instruments

Alternatively, financial instruments can be categorized by "asset class" depending on whether they are equity based (reflecting ownership of the issuing entity) or debt based (reflecting a loan the investor has made to the issuing entity). Ownership is the state or fact of exclusive rights and control over Property, which may be an object, land/real estate, Intellectual property If it is debt, it can be further categorised into short term (less than one year) or long term.

Foreign Exchange instruments and transactions are neither debt nor equity based and belong in their own category.

Matrix Table

Combining the above methods for categorization, the main instruments can be organized into a matrix as follows:

Asset Class	Instrument Type
Asset Class	Securities	Other cash	Exchange-traded derivatives	OTC derivatives
Debt (Long Term) >1 year	Bonds	Loans	Bond futures Options on bond futures	Interest rate swaps Interest rate caps and floors Interest rate options Exotic instruments
Debt (Short Term) <=1 year	Bills, e. In Finance, a bond is a Debt security, in which the authorized issuer owes the holders a debt and is obliged to repay the principal and Interest A loan is a type of Debt. This article focuses exclusively on monetary loans although in practice any material object might be lent In Finance, a futures contract is a standardized Contract, traded on a Futures exchange, to buy or sell a certain Underlying instrument Options are financial instruments that convey the right but not the obligation to engage in a future transaction on some Underlying security, or in a Futures In Finance, a futures contract is a standardized Contract, traded on a Futures exchange, to buy or sell a certain Underlying instrument An interest rate swap is a derivative in which one party exchanges a stream of Interest payments for another party's stream of cash flows Interest rate cap An interest rate cap is a derivative in which the buyer receives payments at the end of each period in which the interest rate exceeds the agreed Interest rate option is a derivative Financial instrument. The global market for exchange-traded interest rate options is notionally valued by the Bank for International In Finance, an exotic option is a derivative which has features making it more complex than commonly traded products ( Vanilla options. g. T-Bills Commercial paper	Deposits Certificates of deposit	Short term interest rate futures	Forward rate agreements
Equity	Stock	N/A	Stock options Equity futures	Stock options Exotic instruments
Foreign Exchange	N/A	Spot foreign exchange	Currency futures	Foreign exchange options Outright forwards Foreign exchange swaps Currency swaps

Some instruments defy categorization into the above matrix, for example repurchase agreements. Treasury securities are Government bonds issued by the United States Department of the Treasury through the Bureau of the Public Debt. Commercial paper is an unsecured Promissory note with a fixed maturity of one to 270 days A deposit account is a current account at a Banking institution that allows money to be deposited and withdrawn by the account holder with the transactions and resulting balance A certificate of deposit or CD is a Time deposit, a financial product commonly offered to consumers by Banks thrift institutions, and An Interest Rate Future is a Futures contract with an interest-bearing instrument as the underlying asset In finance a forward rate agreement ( FRA) is a Forward contract in which one party pays a fixed interest rate and receives a floating interest rate equal to a Software for Fixed assets management and Stock control developed in 2004. Options are financial instruments that convey the right but not the obligation to engage in a future transaction on some Underlying security, or in a Futures In Finance, a futures contract is a standardized Contract, traded on a Futures exchange, to buy or sell a certain Underlying instrument Options are financial instruments that convey the right but not the obligation to engage in a future transaction on some Underlying security, or in a Futures In Finance, an exotic option is a derivative which has features making it more complex than commonly traded products ( Vanilla options. A currency is a unit of exchange, facilitating the transfer of Goods and/or services It is one form of Money, where money is Foreign exchange spot trading is buying one Currency with a different currency for immediate delivery rather than for future delivery A currency future, also FX future or foreign exchange future, is a Futures contract to exchange one Currency for another at a specified date Options are financial instruments that convey the right but not the obligation to engage in a future transaction on some Underlying security, or in a Futures A forward contract is an agreement between two parties to buy or sell an asset at a specified point of time in the future In Finance, a forex swap (or FX swap) is an over-the-counter short term Interest rate derivative instrument. A currency swap (or cross currency swap) is a foreign exchange agreement between two parties to exchange a given amount of one Currency for another and after a specified Better known as Repurchase agreements ( RPs or repos) a Sale and Repurchase Agreement has a Borrower (seller/cash receiver sell securities

Measuring Financial Instrument's Gain or Loss

The table below shows how to measure a financial instrument's gain or loss:

Instrument Type
Instrument Type	Categories	Measurement	Gains and losses
Assets	Loans and receivables	Amortized costs	Net income when asset is derecognized or impaired (foreign exchange and impairment recognized in net income immediately)
Assets	Available for sale financial assets	Deposit account - Fair value	Other comprehensive income (impairment recognized in net income immediately)

External links

IFRS List - The online community about IFRS/IAS and Auditing

Off balance sheet (OBS usually means an Asset or Debt or financing activity not on the company's Balance sheet.

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