Definition of Financial instrument:
A document (such as a check, draft, bond, share, bill of exchange, futures or options contract) that has a monetary value or represents a legally enforceable (binding) agreement between two or more parties regarding a right to payment of money. See also debt instrument, equity instrument, and financing instrument.
Financial instruments are assets that can be traded, or they can also be seen as packages of capital that may be traded. Most types of financial instruments provide efficient flow and transfer of capital all throughout the world's investors. These assets can be cash, a contractual right to deliver or receive cash or another type of financial instrument, or evidence of one's ownership of an entity.
Financial instruments can be real or virtual documents representing a legal agreement involving any kind of monetary value. Equity-based financial instruments represent ownership of an asset. Debt-based financial instruments represent a loan made by an investor to the owner of the asset.
How to use Financial instrument in a sentence?
- Due to the financial instrument they had drawn up both parties were able to dissolve the partnership without a legal battle.
- You should always know how to read any financial instrument so that you can always have a good grasp on where things stand.
- Financial instruments may be divided into two types: cash instruments and derivative instruments.
- A financial instrument is a real or virtual document representing a legal agreement involving any kind of monetary value. .
- Foreign exchange instruments comprise a third, unique type of financial instrument.
- Financial instruments may also be divided according to an asset class, which depends on whether they are debt-based or equity-based.
- We had the financial instrument set in place and were ready to begin the next phase of the process, which would take a long time.
Meaning of Financial instrument & Financial instrument Definition