BT301 - Introduction to Biotechnology
Question(s) similar to the following:
A financial instrument is a real or virtual document representing a legal agreement involving some sort of monetary value." Discuss further on financial instruments by giving examples. Point out some of its uses and important characteristics.
Question 1: A financial instrument is a real or virtual document representing a legal agreement involving some sort of monetary value." Discuss further on financial instruments by giving examples. Point out some of its uses and important characteristics.
Answer: Suggest Edit
Financial Instrument
Financial instrument is a written obligation of one party to transfer something of value to anther party at a future date under certain conditions.By written obligation we mean that it is enforced by the government and this obligation is an important feature of a financial instrument.
The party here can be an individual, company or a government
Future date can be specified or when some event occurs.
Examples: Stocks, bonds, insurance etc are examples of financial instruments.
Characteristics of Financial Instruments: There are certain characteristics of financial instruments.
Standardization:
It is a standardized agreement which enables reduction in costs of complexity. So because of this most financial instruments today are similar.
Communicate Information:
Provide certain important information about the issuer which otherwise would have been difficult to gather for the lenders.
Value of Financial Instruments: The value of financial instruments depends on various factors.
Size: Larger the promised payment more valuable is the financial instrument.
Timing: The sooner the payment is made increases the value of financial instrument.
Risk: A financial instrument is more valuable if there are greater possibilities that payment will be made.
Circumstances: Payments made when needed the most makes the financial instrument more valuable.
Uses of Financial Instruments:
Store Of Value:
Stocks: The stock holder is a part owner of the firm and receives part of its profits.
Bonds: A form of loan which promises to make repayment in future dates. Bank loans: Borrowers obtains resources from lenders in exchange of promised payments.
Transfer of Risk:
Insurance: Takes premium to assure payment under particular conditions (accident, death etc)
Future contracts: It is an agreement to exchange fixed quantity of a commodity or an asset at a fixed price. Transfer risk of price fluctuations.
Similar Questions:
Question 2: A financial instrument is a real or virtual document representing a legal agreement involving some sort of monetary value." Discuss further on financial instruments by giving examples. Point out some of its uses and important characteristics.
Answer: Suggest Edit
Financial Instrument
Financial instrument is a written obligation of one party to transfer something of value to anther party at a future date under certain conditions.By written obligation we mean that it is enforced by the government and this obligation is an important feature of a financial instrument.
The party here can be an individual, company or a government
Future date can be specified or when some event occurs.
Examples: Stocks, bonds, insurance etc are examples of financial instruments.
Characteristics of Financial Instruments: There are certain characteristics of financial instruments.
Standardization:
It is a standardized agreement which enables reduction in costs of complexity. So because of this most financial instruments today are similar.
Communicate Information:
Provide certain important information about the issuer which otherwise would have been difficult to gather for the lenders.
Value of Financial Instruments: The value of financial instruments depends on various factors.
Size: Larger the promised payment more valuable is the financial instrument.
Timing: The sooner the payment is made increases the value of financial instrument.
Risk: A financial instrument is more valuable if there are greater possibilities that payment will be made.
Circumstances: Payments made when needed the most makes the financial instrument more valuable.
Uses of Financial Instruments:
Store Of Value:
Stocks: The stock holder is a part owner of the firm and receives part of its profits.
Bonds: A form of loan which promises to make repayment in future dates. Bank loans: Borrowers obtains resources from lenders in exchange of promised payments.
Transfer of Risk:
Insurance: Takes premium to assure payment under particular conditions (accident, death etc)
Future contracts: It is an agreement to exchange fixed quantity of a commodity or an asset at a fixed price. Transfer risk of price fluctuations.
Past Papers of BT301 - Introduction to Biotechnology
Question 1: A financial instrument is a real or virtual document representing a legal agreement involving some sort of monetary value." Discuss further on financial instruments by giving examples. Point out some of its uses and important characteristics.
Answer: Suggest Edit
Financial Instrument
Financial instrument is a written obligation of one party to transfer something of value to anther party at a future date under certain conditions.By written obligation we mean that it is enforced by the government and this obligation is an important feature of a financial instrument.
The party here can be an individual, company or a government
Future date can be specified or when some event occurs.
Examples: Stocks, bonds, insurance etc are examples of financial instruments.
Characteristics of Financial Instruments: There are certain characteristics of financial instruments.
Standardization:
It is a standardized agreement which enables reduction in costs of complexity. So because of this most financial instruments today are similar.
Communicate Information:
Provide certain important information about the issuer which otherwise would have been difficult to gather for the lenders.
Value of Financial Instruments: The value of financial instruments depends on various factors.
Size: Larger the promised payment more valuable is the financial instrument.
Timing: The sooner the payment is made increases the value of financial instrument.
Risk: A financial instrument is more valuable if there are greater possibilities that payment will be made.
Circumstances: Payments made when needed the most makes the financial instrument more valuable.
Uses of Financial Instruments:
Store Of Value:
Stocks: The stock holder is a part owner of the firm and receives part of its profits.
Bonds: A form of loan which promises to make repayment in future dates. Bank loans: Borrowers obtains resources from lenders in exchange of promised payments.
Transfer of Risk:
Insurance: Takes premium to assure payment under particular conditions (accident, death etc)
Future contracts: It is an agreement to exchange fixed quantity of a commodity or an asset at a fixed price. Transfer risk of price fluctuations.
Similar Questions:
Question 2: A financial instrument is a real or virtual document representing a legal agreement involving some sort of monetary value." Discuss further on financial instruments by giving examples. Point out some of its uses and important characteristics.
Answer: Suggest Edit
Financial Instrument
Financial instrument is a written obligation of one party to transfer something of value to anther party at a future date under certain conditions.By written obligation we mean that it is enforced by the government and this obligation is an important feature of a financial instrument.
The party here can be an individual, company or a government
Future date can be specified or when some event occurs.
Examples: Stocks, bonds, insurance etc are examples of financial instruments.
Characteristics of Financial Instruments: There are certain characteristics of financial instruments.
Standardization:
It is a standardized agreement which enables reduction in costs of complexity. So because of this most financial instruments today are similar.
Communicate Information:
Provide certain important information about the issuer which otherwise would have been difficult to gather for the lenders.
Value of Financial Instruments: The value of financial instruments depends on various factors.
Size: Larger the promised payment more valuable is the financial instrument.
Timing: The sooner the payment is made increases the value of financial instrument.
Risk: A financial instrument is more valuable if there are greater possibilities that payment will be made.
Circumstances: Payments made when needed the most makes the financial instrument more valuable.
Uses of Financial Instruments:
Store Of Value:
Stocks: The stock holder is a part owner of the firm and receives part of its profits.
Bonds: A form of loan which promises to make repayment in future dates. Bank loans: Borrowers obtains resources from lenders in exchange of promised payments.
Transfer of Risk:
Insurance: Takes premium to assure payment under particular conditions (accident, death etc)
Future contracts: It is an agreement to exchange fixed quantity of a commodity or an asset at a fixed price. Transfer risk of price fluctuations.
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