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Home > QFINANCE Dictionary > Definition of financial instrument

Definition of

financial instrument

Stockholding & Investments

contract that is evidence of financial transaction any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments include both primary financial instruments such as bonds, currency, and stocks, and derivative financial instruments, whose value derives from the underlying assets.

Recommended Further Reading (Term count)
  • Standard Procedure: IFRS Harmonization
    by Victor Smart
    This article was first published in Quantum magazine.International accounting standards are vital to make allocating capital easier and more effective on a global scale. But there is significant variance in the pace at which they are being adopted, while regionalization threatens to change the shape of the market.
  • Possibilities for Shariah-Compliant Derivatives
    This checklist describes Islamic financial services providers’ attempts to overcome issues with conventional derivatives through the use of shariah-compatible transactions.
  • An Introduction to Islamic Finance Theory and Practice
    Zamir Iqbal and Abbas Mirakhor (2007)
    Two of the best-known authorities in Islamic economics, finance, and banking provide an insightful and comprehensive introduction to Islamic financial principles and practice. Offers a concise background on the development of Islamic finance, and a practical overview of the main products and processes. Reflects on the progress that Islamic financial markets have made over the last few years, which has helped create an appetite for the Western...
  • Swap Valuation
    In finance, a swap is a derivative in which two parties agree to exchange one stream of cash flow against another. The swap buyer makes a stream of interest payments on a principal sum to the seller, based on the present value of the asset, for a fixed period of time. The seller then receives payments from the seller, which are usually based on a fixed rate, such as LIBOR. The swap valuation is the price that each party assigns to the components...

Definitions of ’financial instrument’ and meaning of ’financial instrument’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’financial instrument’ and other financial terms with our online QFINANCE Financial Dictionary.

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