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The document explains the concept of asset classes, which are groups of financial assets with similar structures and trading characteristics. It categorizes assets into five main types: stocks, bonds, cash equivalents, real estate, and tangible assets. Each asset class has distinct characteristics, risks, and benefits, influencing investment strategies.

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4 views1 page

T 5

The document explains the concept of asset classes, which are groups of financial assets with similar structures and trading characteristics. It categorizes assets into five main types: stocks, bonds, cash equivalents, real estate, and tangible assets. Each asset class has distinct characteristics, risks, and benefits, influencing investment strategies.

Uploaded by

ahmed.falah.098z
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Understanding Asset Classes When you trade, you trade financial assets of one kind or another.

There
are different classes, or types, of assets – such as fixed income investments - that are grouped together
based on their having a similar financial structure and because they are typically traded in the same
financial markets and subject to the same rules and regulations. There’s some argument about exactly
how many different classes of assets there are, but many analysts commonly divide assets into the
following five categories: • Stocks, or equities - Equities are shares of ownership that are issued by
publicly traded companies and traded on stock exchanges, such as the NYSE or Nasdaq. You can
potentially profit from equities either through a rise in the share price or by receiving dividends. •
Bonds, or other fixed income investments (such as certificates of deposit – CDs) – Fixed-income
investments are investments in securities that pay a fixed rate of return in the form of interest. While
not all fixed income investments offer a specific guaranteed return, such investments are generally
considered to be less risk than investing in equities or other asset classes. • Cash or cash equivalents,
such as money market funds – The primary advantage of cash or cash equivalent investments is their
liquidity. Money held in the form of cash or cash equivalents can be quickly and easily accessed at any
time. • Real estate, or other tangible assets – Real estate or other tangible assets are considered as an
asset class that offers protection against inflation. The tangible nature of such assets also leads to them
being considered as more of a “real” asset, as compared to assets that exist only in the form of financial
instruments

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