Types of Financial Intermediaries
Financial intermediaries help entities achieve their goals by providing products and services that... Read More
Assets
Securities: includes both debt and equity securities. Securities may be further classified as public or private securities, depending on if they are traded on a public exchange.
Currencies: monies issued by national monetary authorities.
Contracts: agreements to trade other assets in the future.
Commodities: precious metals, energy products, industrial metals, and agricultural products.
Real Assets: all tangible properties, such as real estate, airplanes, airports, machinery, timberland, and pipelines.
Markets
Spot Markets: traded contracts require immediate delivery.
Primary Market: funds flow from the purchaser to the issuer.
Secondary Market: funds flow between traders.
Money Markets: trades debt instruments maturing in one year or less.
Capital Markets: trades instruments maturing in over one year, such as bonds and equities. Corporations usually finance their operations through the capital markets.
Traditional Investment Markets: transactions involve only direct or indirect investments in publicly traded debts and equities.
Alternative Investment Markets: includes private markets investments, which are more difficult to trade and value. To compensate for the limited liquidity, investors in these markets expect to earn a greater risk-adjusted return than they would in traditional investments.
Question
A direct investment in an industrial warehouse is an example of a:
- Security.
- Contract.
- Real asset.
Solution
The correct answer is C.
A real asset refers to a physical or tangible asset, such as real estate or commodities, as opposed to financial assets like stocks or bonds. In this case, an industrial warehouse is a form of real estate, making it a real asset.
A is incorrect. A security is a financial instrument that represents an ownership position in a corporation (such as stocks), a creditor relationship with a government or corporation (such as bonds), or rights to ownership (such as options).
B is incorrect. A contract is a legal agreement between two or more parties outlining obligations, rights, or duties. While contracts may be involved in acquiring or managing the warehouse, the warehouse itself is not a contract but a real, tangible asset.
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2021-07-23
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2021-07-17
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2021-07-16
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2021-06-28
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