What is Financial Instruments?
Financial Instruments form another important element of a financial system.
Financial instruments are financial contracts of different nature made between institutional units. These comprise the full range of financial claims and liabilities between institutional units, including contingent liabilities like guarantees, commitments, etc.
The concept of financial instrument is wider than the concept of financial
asset. Financial assets are contracts that do not contain contingency. Financial
asset is defined as any contract from which a financial claim may derive for one
party and a financial liability or participation in equity for another.
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