Business, Economics, Accounting and Finance

Types of Assets (Finance)

What you could expect from a balance sheet.
  • entity

    • company

    • partnership

    • trust

  • Balance Sheet

    • Asset: a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide a future benefit.

    • โ€‹https://www.investopedia.com/terms/a/asset.aspโ€‹

      • Intangible assets: economic resources that have no physical presence.

        • patents

        • trademarks

        • copyrights

        • goodwill

      • Current Assets: short-term economic resources that are expected to be converted into cash within one year.

        • cash

        • cash equivalents

        • accounts receivable

        • inventory

        • prepaid expenses

      • Fixed Assets: long-term resources, such as plants, equipment, and buildings.

      • Financial Assets: represent investments in the assets and securities of other institutions.

        • Alias

          • When treated as something owned: โ€œFinancial Assetsโ€ โ€“ assets that can be traded.

          • When treated as something exchanged: โ€œFinancial Instrumentsโ€ โ€“ monetary contracts between parties.

          • https://marketbusinessnews.com/financial-glossary/financial-instrument/

        • Types

        • Classifications

          • by how they are valued

            • Cash instruments are instruments that the markets value directly

              • Others

                • debt-based

                  • Short-term

                    • certificates of deposit (CDs)

                    • Deposits

                  • Long-term

                    • Loans

                • Foreign Exchange Instruments

                  • Spot foreign exchange

              • Securities: a thing deposited or pledged as a guarantee of the fulfillment of an undertaking or the repayment of a loan, to be forfeited in case of default.

              • โ€‹https://www.investopedia.com/terms/s/security.aspโ€‹

                • Classified by nature

                  • Equity security (โ€œstocksโ€): represents shareholdersโ€™ ownership interest in an entity.

                    • common stock

                    • preferred stock (preferred equity)

                  • Debt security: represents money that is borrowed and must be repaid, with terms that stipulates the size of the loan, interest rate and maturity or renewal date.

                    • collateralized securities

                      • as โ€œsecuritiesโ€

                        • Asset-backed security (ABS): pools assets; resells them to investors.

                          • (Usually we mean non-mortgage assets)

                        • Mortgage-backed security (MBS): assets are mortgage(s).

                          • (Technically a kind of ABS.)

                      • as โ€œstructured productsโ€ (as in structured finance)

                        • Collateralized debt obligation (CDO): pools together cash flow-generating assets and repackages this asset pool into discrete tranches that can be sold to investors.

                        • โ€‹https://www.investopedia.com/terms/c/cdo.aspโ€‹

                        • Collateralized mortgage obligation (CMO): contains a pool of mortgages bundled together and sold as an investment.

                    • Short-term

                      • bills

                        • T-bills

                        • Commercial paper

                    • Long-term

                      • Bonds

                        • government bonds

                        • Corporate bonds

                  • Hybrid security

                • Marketable securities: to be sold or redeemed within a year -> can be easily converted to cash.

            • Derivative instruments (โ€œderivativesโ€) are instruments whose worth we derive from the value and characteristics of at least one underlying entity.

              • Classified by whether their trading happens at exchanges

                • Exchange-traded derivatives (ETD): traded via exchanges

                  • debt-based

                    • Long-term

                      • Bond futures

                      • Options on bond futures

                    • Short-term

                      • Short-term interest rate futures

                  • equity-based

                    • Stock options

                    • Equity futures

                  • Foreign exchange instruments

                    • Currency futures

                • Over-the-counter (OTC) derivatives: traded (and privately negotiated) directly between two parties, without going through an intermediary.

                  • debt-based

                    • Short-term

                      • Forward rate agreements

                    • Long-term

                      • Interest rate swaps

                      • Interest rate caps and floors

                      • Interest rate options

                      • Exotic derivatives

                  • equity-based

                    • Stock options

                    • Exotic derivatives

                  • Foreign exchange instruments

                    • Foreign exchange options

                    • Outright forwards

                    • Foreign exchange swaps

                    • Currency swaps

              • Types

                • option is a contract which gives the buyer (the owner or holder of the option) the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified strike price prior to or on a specified date, depending on the form of the option.

          • by asset classes

            • debt-based: reflect a loan the investor made to the issuing entity

              • Short-term

              • Long-term

            • equity-based: reflect ownership of the issuing entity

              • Securities under equity-based financial instruments are stocks

            • Neither:

              • Transactions

              • Foreign Exchange Instruments

    • Liability

      • ...

      • certain Derivatives

      • Upcoming Payroll

      • Bonuses

      • Contracts

      • Debt: an amount borrowed

        • bank loans

        • bonds

          • corporate bonds

          • government bonds

      • (Certain Types Of) Leases

      • Legal Settlements

      • Payments To Vendors

      • Required Stock Redemptions