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Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash , evidence of an ownership interest in an entity or a contractual right to receive or deliver in the form of currency ; debt ; equity ; or derivatives.
International Accounting Standards IAS 32 and 39 define a financial instrument as "any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity".
Financial instruments may be categorized by "asset class" depending on whether they are equity-based or debt-based. If the instrument is debt it can be further categorized into short-term or long-term. Foreign exchange instruments and transactions are neither debt- nor equity-based and belong in their own category.