explain about various financial instruments like equity, derivatives, bonds, preference shares etc,..?

Question

Accepted Answer

Financial instruments are assets that can be traded and have a monetary value.

Equity represents ownership in a company and can be bought and sold as stocks.
Derivatives are contracts that derive their value from an underlying asset, such as options and futures.
Bonds are debt securities that represent a loan made by an investor to a borrower, such as a government or corporation.
Preference shares are a type of stock that pays a fixed dividend and has priority over common stock in the event of liquidation.
Other financial instruments include mutual funds, exchange-traded funds (ETFs), and commodities.
Investors use financial instruments to diversify their portfolios and manage risk.

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