Types of asset classes of financial instruments

[Starmix]

Some of the investors delved into the types of asset classes of financial instruments before they invest more. It is very irtant, you know, risks are unavoidable and it is best for them to know the types first. The first type of asset class is called: debt-based financial instruments and are essentially loans made by an investor to the owner of the asset . For short-term debt -based financial instruments for one year or less it depends on the loaner. The other type of asset class is called , equity-based financial instruments. This type of asset class represents ownership of an asset. This kind is most often stocks which can be either common stock or preferred shares.

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[Suba]

We should know the risk profile first before investing. Equity-based financial instruments from the stock category such as equity futures and stock options, while preferred stock tends to be a debt instrument, other types of debt instruments such as T-bills and commercial paper.

 

[Starmix]

It's best to know these things especially if not skilled or lacking knowledge of asset classes of financial instruments. It's complicated to think without knowing them.