Financial instrument

Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash, evidence of an ownership interest in an entity or a contractual right to receive or deliver.
International Accounting Standards IAS 32 and 39 define a financial instrument as "any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity".
Financial instruments may be categorized by "asset class" depending on whether they are equity-based or debt-based. If the instrument is debt it can be further categorized into short-term or long-term. Foreign exchange instruments and transactions are neither debt- nor equity-based and belong in their own category.


Financial instruments can be either cash instruments or derivative instruments:
Some instruments defy categorization into the above matrix, for example repurchase agreements.

Measuring gain or loss

The gain or loss on a financial instrument is as follows: