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Investing In Financial Assets Investment

Posted on : 18-06-2018 | By : leeDS | In : General

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We will explore 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 risk rating, you 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 rapid commercial development, if their predictions regarding evolution of the emerging company is successful, certainly the value of the acquired shares will have a substantial increase in the price, but if the company fails to hold in the market, its shares will lose value rapidly. The purchase and sale of financial assets are held through the mediation of institutions authorized for that purpose as Banks, Brokers, Brokers etc., Who provide the technological infrastructure to ensure transparency of operations, in exchange for cash 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 talk in depth about this interesting market, but we can summarize by saying it is the market in which operations are carried out with financial instruments and derivatives, currencies, futures, etc. outside of the physical 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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