Financial Instruments

Financial instruments are assets that can be traded, representing a claim to value or an obligation. They include stocks (ownership in a company), bonds (loans made to companies or governments), and derivatives (contracts whose value is based on other assets). Financial instruments can be used for investment, risk management, or speculation. They play a crucial role in the economy by facilitating transactions and capital flow, allowing individuals and organizations to raise funds or mitigate financial risks. Understanding these instruments is essential for making informed investment decisions and managing personal finances effectively.