What are financial instruments?

Financial instruments can be either cash instruments or derivative instruments: Cash instruments – instruments whose value is determined directly by the markets. They can be securities, which are readily transferable, and instruments such as loans and deposits, where both borrower and lender have to agree on a transfer.

What are long-term and short-term financial instruments?

Long-term financial instruments include bonds, mortgages, and certain types of loans, while short-term financial instruments include treasury bills, commercial paper, and short-term loans. This has been a guide to what are Financial Instruments.

What are debt-based financial instruments?

1. Debt-Based Financial Instruments Debt-based financial instruments are categorized as mechanisms that an entity can use to increase the amount of capital in a business. Examples include bonds, debentures, mortgages, U.S. treasuries, credit cards, and line of credits (LOC).

What are cash instruments?

Cash instruments are financial instruments with values directly influenced by the condition of the markets. Within cash instruments, there are two types; securities and deposits, and loans. Securities: A security is a financial instrument that has monetary value and is traded on the stock market.