Development of new financial instruments

The term “investments” began to be used in domestic economic literature since the 80’s. In the administrative system of economic management, the basic concept of investment activity is capital investment. The main approaches to the analysis of the essence of capital investment – and expensive resource – characterized by capital investment on one side only: the cost of reproduction of fixed assets or resources spent on these purposes. In the western economic literature has traditionally treated as investment, any investment of capital in order to increase it in the future.

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Development of market-based approach to understanding the investment resulted in the consideration of investments in the unity of resources, investments and returns on investment, as well as the inclusion of investment objects of any attachments that give income (effect). The legal aspects of investments are defined as cash, securities, other property, including property rights, other rights having monetary value invested in the business objects and / or other activities for profit and / or achieve other benefits.

Financial instruments are, in general, any form of contracts, which resulted in both having a financial asset of one entity and a financial liability or equity instrument – in another. Financial instruments include both primary and derivative instruments (derivative instruments), such as options, futures and forward contracts. In accordance with IAS 32 financial instruments arise only as a result of contract, contractual obligations and rights. Liabilities or assets are non-contractual nature, such as tax liabilities, which arise as a result of the law, are not financial assets or liabilities.

Portfolio managers and investors have recourse to fixed-term contracts for insurance against rising or falling market value of financial assets. In addition, financial derivatives have significant speculative opportunities.Futures market is highly profitable, albeit a very risky field of investment.Profitability of speculative trading in derivatives could potentially reach several thousand percent per annum. However, comparable and may be lost. Derivatives market in the financial world is one of the most developed and attractive for different categories of investors. Turnover of exchange trading on futures contracts are usually substantially higher than turnover in the markets of the underlying assets.

Investment activity is associated with various kinds of risks. Customary to distinguish common (systematic) risks – the same for all participants of investment activity and determining factors for which the investor can not affect, and specific (unsystematic) risks, which depend on the ability of investors to choose investment targets with acceptable risk and risk management. Therefore, the objective of the course work – to explore new types of financial instruments, taking into account international experiences. Methodological basis of work structure and logical connection to her management issues were the development of domestic and foreign scientists in management, investment management, marketing and investment.

The financial activities of any economic entity is multifaceted and represents a set of interrelated areas, the priority of which is in the strategic perspective is to design, simulation and implementation of various financial products that provide the best end financial results and economic sustainability of the organization. Short-term instruments – a savings instruments with maturity of one year and the year.

The most important instruments of this kind are savings deposits at banks and accounts NAU (accounts traded by order of withdrawal of funds), money market accounts, securities, mutual funds, certificates of deposit, short-term commercial paper, treasury bills, bonds of the central agencies, and savings bonds . Often these tools are purchased to “build out” on time free money and earn them some income until you select suitable long-term instruments, in other words, they serve as a reserve of liquidity, or cash.Because the risk on these instruments is small or non existent, they are widely used by those who want something to earn the amount of temporarily free, as well as conservative stock investors, who typically begin to invest money with the use of short-term instruments [1. 583-624 p.].

Short-term instruments handy not only for the placement of free money, but in and of themselves – they can reduce the risk of a portfolio investor, as may be useful for urgent cash requirements, and this is an important function of any financial plan. A financial planner typically advise an individual investor from purely practical considerations to keep in short-term instruments equivalent of net income for the last three to six months (after tax) to be able to pay for unforeseen expenses. Such expenses may be associated with serious illness or an investor with a loss of job, and it can happen at a time when more long-term securities are falling in price. If at this moment have to sell long-term securities, you can lose a lot.