Editing Financial instrument (section)

{{Short description|Monetary contract between parties}}
{{more citations needed|date=July 2024}}
{{Finance sidebar |instruments}}
'''Financial instruments''' are monetary [[Contract|contracts]] between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership, interest in an entity or a contractual right to receive or deliver in the form of [[currency]] (forex); debt ([[bond (finance)|bonds]], [[loan]]s); [[Equity (finance)|equity]] ([[share (finance)|shares]]); or  [[Derivative (finance)|derivatives]] ([[option (finance)|options]], [[futures contract|futures]], [[forward contract|forwards]]).

[[International Financial Reporting Standards|International Accounting Standards]] IAS 32 and [[IAS 39|39]] define a financial instrument as "any contract that gives rise to a [[financial asset]] of one entity and a financial [[Liability (financial accounting)|liability]] or equity instrument of another entity".<ref>International Accounting Standard (IAS) 32.11</ref>

Financial instruments may be categorized by "[[Asset classes|asset class]]" depending on whether they are foreign exchange-based (reflecting foreign exchange instruments and transactions), equity-based (reflecting [[ownership]] of the issuing entity) or debt-based (reflecting a loan the investor has made to the issuing entity). If the instrument is debt it can be further categorized into short-term (less than one year) or long-term.