Chapter 2 Financial assets/instruments Agenda Asset Debt Equity Asset Definition Some property that can generate cash flows Category of asset Real/tangible Intangible (financial) Financial asset Debt Equity Debt A loan to a firm, government or individuals. Debt features Principal value Interest Time to maturity Priority to assets & earnings Categories of debt Short term Long term Short term debt Treasury bills Repo Federal funds Banker’s mercial paper Certificate of deposit Long term debt Maturities > 1 year