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New Issue Market (NIM) Vs. Secondary Market
Since his private properties are held liable for satisfying business debts, he can get more financial assistance from others.
Financial assets can be classified differently under different circumstances. One such classification is:
(i) Marketable assets
(ii) Non-marketable assets
Marketable assets are those which can be easily transferred from one person to another without much hindrance. Example: Shares of Listed Companies, Government Securities, Bonds of Public Sector Undertakings etc.
On the other hand, if the assets cannot be transferred easily, they come under this category. Example: Bank Deposits, Provident Funds, Pension Funds, National Savings Certificates, Insurance Policies etc. This classification is shown in the following chart.
In any financial transaction, there should be a creation or transfer of financial asset.
Hence, the basic product of any financial system is the financial asset. A financial asset is one which is used for production or consumption or for further creation of assets. For instance, a buys equity shares and these shares are financial assets since they earn income in future.
In this context, one must know the distinction between financial assets and physical assets. Unlike financial assets, physical assets are not useful for further production of goods or for earning income. For example X purchases land and buildings or gold and silver. These are physical assets since they cannot be used for further production. Many physical assets are useful for consumption only.
It is interesting to note that the objective of investment decides the nature of the asset. For instance if a building is bought for residence purposes, it becomes a physical asset. If the same is bought for hiring, it becomes a financial asset.
New Issue Market
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