What is the difference between a financial instrument and a financial asset

What is the difference between a financial instrument and a financial asset Introduction: The World of Finance Hello everyone, and welcome to today's video! Finance, as a field, is a vast and intricate domain. Within it, we encounter numerous terms and concepts that can sometimes be confusing. Today, we'll be focusing on two such terms: financial instruments and financial assets. While they may seem similar, they have distinct characteristics and applications. So, let's dive in and explore their differences! Defining Financial Instruments To start, let's define what we mean by 'financial instrument.' In essence, a financial instrument is a contract or agreement between two parties that represents a monetary value. It can be traded, transferred, or exchanged. Financial instruments can take various forms, such as stocks, bonds, derivatives, or commodities. They serve as vehicles for investors to participate in the financial markets and manage risk. Understanding Financial Assets Now, let's turn our attention to financial assets. A financial asset refers to any resource that has an economic value.