Financial instruments are a typical non-human chapter.
For most subjects, all that is needed is confirmation, initial measurement, and subsequent measurement, plus a disposition.
But for financial instruments, it's very different.
You have to classify before you can confirm it, and the description of classification in the textbook is like a book in heaven, ensuring that you can't understand what it wants to express after reading it 50 times.
As Lao Tie said, aren't financial instruments divided into financial assets, financial liabilities and equity instruments?
Then I ask, why do textbooks talk about derivatives?What is the relationship between derivatives and financial instruments?
First of all, we must be sure that the textbook writers are definitely not crazy, and they have nothing to do to write derivatives to amuse us.
So what is the reason?
In fact, there are two ways to classify it.
1.Financial instruments can be divided into financial assets, financial liabilities and equity instruments according to different objects.
2.It can also be divided into basic financial instruments and derivative financial instruments according to the different subject matter.
02 Classification
Financial instruments can be divided into financial assets, financial liabilities and equity instruments according to different objects.Essentially, these are two sides of the same coin.
Financial assets are one side, financial liabilities and equity instruments are another.
The core of what we want to determine on the account is whether our company is an investor or an investee, rather than the attributes of the tool itself.
Like other criteria, such as fixed assets, intangible assets, etc., the core is to look at the attributes of such things themselves, whether they are recognizable or unrecognizable, so as to classify them as fixed assets or intangible assets.
Financial instruments are not the same, and the attributes of a certain instrument itself are not the core element of judgment.
It is not that the same thing, for the same company, may be classified as a financial asset, a financial liability or an equity instrument;
Rather, it means that the same thing is a financial asset for the investor, and a financial liability or equity instrument for the investee.
Because finance is, to put it bluntly, a game of money.
In this game, someone has a need for money, someone has extra money, and the core of this game is to find a place to invest for some people's excess money, or find money for some people's good projects**.
As long as it is the investor, that is, the party that has excess money, that is, the party who pays the moneyIt is always the financial assets that are recognized;
As long as it is the investee, that is, the party that has the need for funds, that is, the party that uses the moneyIt is always a financial liability or equity instrument that is recognized.
For example, bonds are financial assets for investors and financial liabilities for investors
For example, it is still a financial asset for the investor, and an equity instrument for the investee.
03 Classification
Financial instruments can be divided into basic financial instruments and derivative financial instruments according to the different underlying objects.The so-called basic financial instruments are the most basic and common **, bonds, cash, accounts receivable and the like.
A derivative financial instrument is an instrument derived from another financial instrument (both derivative and non-derivative).Essentially, it is a game on something, and the core is to increase leverage and reduce risk.
For example, the call options and put options of ** are derivative financial instruments.
For a detailed interpretation of derivative financial instruments, please look forward to the next article, where you can have a general impression.
04 The relationship between the two classifications
These two classifications are not the relationship between inclusion and inclusion, but rather a juxtaposition and can be crossed.
For example, the underlying financial instruments in the classification can be classified into financial assets, financial liabilities or equity instruments according to the classification (i.e., different objects).
For example, the financial assets in the classification can be divided into basic financial assets and derivative financial assets according to the classification (that is, the difference in the subject matter).
05 Summary
Finally, a quick summary: