What are the different types of financial products?
Financial products are classified into three main categories depending on their own function from the investor's point of view. As a result of investing in one of the available types of financial products, the investor either becomes the owner, creditor, or gets the right to buy or sell the product. More popular financial products include shares, bonds, investment funds, orders and options. They are usually offered in public trading markets in exchange for a certain cash value. Investors pay the determined price for the amount of shares in the hope that the value will increase over time. The Seller shall receive shares that they need to maintain its operations over water. Shares can also earn a dividend income, which represents part of the profits issuing companies that are returned to their shareholders. The issuing company owes its investors. Unlike shares, the investor is not entitled to ownership. This type of investment usually has a lower yield or yield than stocks, but also brings less risk. ANDNveestors exchange cash, which is returned by the company at a certain future date, along with interest.
If the investor wants to destroy his bonds before the date when planned for adults, he can sell them back. The value of the bond is unlikely to reach its nominal value, which represents the amount scheduled to repay at maturity. The investor will receive the market value of a bond that may be less or more than he had originally paid for. Private companies and the government sell bonds to the general public.
Investment funds are financial products that can consist of money market, capital or bond funds. Usually do not invest one particular company or resources. These funds use associated cash sources for the purchase of various shares, bonds or very low commentary investments to diversify and reduce the risk. Depending on the financialInvestment funds could range from high -risk international shares to stable bonds with low return on account of a similar savings account.
Warranties and options consist of buying and the possibility of selling a financial product. The investor does not acquire ownership or the status of the creditor. Options are the privilege to buy or sell shares at a certain price, while the commands are a privilege to buy or sell bonds. The assumption of these types of investment is referred to as securing, which is the hope that the market value of shares or bond will turn into the way the investor predicts.