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Meaning & use

financial instruments

noun·Academicfinancetechnical

Last updated

UK/faɪˌnænʃl ˈɪnstrəmənts/
US/faɪˌnænʃl ˈɪnstrəmənts/

Meaning

  1. nounusually pluralfinance

    Contracts or assets with monetary value that can be traded or used to raise money, such as stocks, bonds, loans and options.

    Grammar: Usually plural: stocks and bonds are financial instruments; singular is financial instrument.

    Patterns

    • trade financial instruments
    • invest in financial instruments

    Bonds and shares are the most common financial instruments.

    The bank holds a wide range of financial instruments.

    Regulators now require firms to report their complex financial instruments.

Word forms

singularfinancial instrument

Common combinations

trade financial instruments
Brokers trade financial instruments for their clients.
complex financial instruments
Complex financial instruments played a role in the 2008 crisis.
derivative financial instruments
The company uses derivative financial instruments to manage risk.
issue financial instruments
Governments issue financial instruments such as treasury bonds.
invest in financial instruments
Many pension funds invest in financial instruments of all kinds.

Synonyms and how they differ

securities
Securities means tradable assets like stocks and bonds, so it is narrower than financial instruments, which also include loans and contracts.
assets
Assets covers anything of value, including property, while financial instruments are specifically contracts or tradable claims.
investments
Investments is everyday language for anything you put money into, whereas financial instruments sounds technical and formal.
derivatives
Derivatives are one type of financial instrument whose value depends on another asset.

Word family

financial adjective
relating to money and investment
finance noun
the management of money
financier noun
a person who manages large sums of money
instrument noun
a tool or, in finance, a tradable contract

Commonly confused: financial instruments or financial institution?

financial instruments vs financial institution

A financial institution is an organization such as a bank; a financial instrument is a product such as a bond that such an organization might sell.

Practice

Which of the following is a financial instrument?

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