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Finance #1: Intro, Real vs. Financial Assets

14 Jun

The productive power of an economy is determined by the real assets of an economy such as its land, buildings, machines, and the knowledge that can be used to produce goods and services. Real assets are what bring true value to an economy whereas financial assets, such as stocks and bonds.

Financial assets essentially determine the allocation of wealth and are claims to the income generated by the real assets mentioned earlier. Investors place their wealth into various securities provided by companies. This money, in turn, is then used to pay for real assets such as plant equipment, technology, and/or inventory.

In this series, I will be focusing primarily on financial assets, financial markets, and the investment process in general. My intentions are to discuss bonds and debt securities, equity such as common stock, and derivative securities as well as other concepts, investment tactics, and formulas to help you (the investor) make your decisions. I’ll also try to keep my posts shorter than my ones of the past while making them more informative and applicable to each of you. Thanks for reading!

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Posted by on June 14, 2011 in Finance/Investment 101

 

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