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Question 1-5B

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Essentials Of Investments
Found in: Page 23
Essentials Of Investments

Essentials Of Investments

Book edition 9th
Author(s) Zvi Bodie, Alex Kane, Alan Marcus, Alan J. Marcus
Pages 748 pages
ISBN 9780078034695

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Short Answer

What are the differences between real and financial assets?

Real assets are the assets owned by a business

Financial assets are the liquid assets through which claims on real assets are held.

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Step by Step Solution

Definition

Real assets are the assets that a business or investor owns while the financial assets are liquid assets through which individuals hold their claims on real assets.

Differences

Difference between real and financial assets

Real Assets

Financial Assets

1. These are ‘real’ assets owned by a business or an investor.

1. These are the ‘liquid assets’ held by owners or investors.

2. These are used to produce goods and services.

2. These are used to hold claim on real assets.

3. They generate net income to the economy.

3. They define the allocation of income or wealth among investors.

4. Land, buildings, equipments and knowledge are its examples.

4. Stocks and bonds are its examples.

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