Investing In Financial Assets

Investing In Financial Assets

We will tackle the exciting market of financial instruments, now enhanced by the development of electronic technologies that have come to small and medium investors to the virtues of a market that once was the exclusive domain of powerful investor. We will develop this time, the various possibilities of investment in financial assets. First let’s define what a financial asset, we can summarize by saying it is a contract between two parties, the issuer of the asset and the buyer of it, creating any contract rights and obligations for each of them. When you buy a financial asset, it naturally seeks a profit or economic return, and assumes risk of loss if the forecasts on the evolution of it not correct, generally the risk assumed, and the expected profit, have a close relationship, are directly proportional (the higher the search for profit in must assume more risk). For example, if government bonds are purchased in one country with a low rating risk, should expect a terse, but the risk involved is minimal, however if you purchase shares of a newly formed company, and you trust that will have a rapid commercial development, if their predictions about emerging developments company are successful, certainly the value of the shares acquired will have a substantial increase in the price, but if the company fails to hold in the market, its shares lose value quickly.

The purchase and sale of financial assets are held through the mediation of institutions authorized for that purpose as, etc., Who provide the technological infrastructure to ensure transparency of operations, in exchange for charging a commission for his intervention. The advent of modern technologies like the Internet, has allowed the rapid development of electronic markets without a physical campus operations, such as the traditional stock market, known as the OTC market (in another article we will to talk in depth about this interesting market, but we can summarize by saying that it is market where transactions are carried out and its derivative financial instruments, currencies, futures, etc. physical outside the bag). Some of the instruments have expanded over the currency – – which allows the investor to benefit from changes in the parity between two currencies such as Euro and U.S. Dollar. Other instruments adopted by many investors are the contracts are apart (Contract for Differences, for its acronym in English). Allows financial transactions carried out on shares, stock indices, commodities, gold, oil, etc in which the settlements are to be performed by the difference between the purchase price and the sale, all of which also no need to carry out the physical delivery of the underlying asset. The two parties agree to exchange the difference between purchase price and the selling price of a financial asset.

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