We will develop this time, the various possibilities of investment in financial assets as described by the The neatest little guide to stock market investing book.
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 about emerging developments in the company are 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 lost value quickly.
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. physically outside of the bag).
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