The material wealth of a society is ultimately determined by the productive capacity of its economy...

The material wealth of a society is ultimately determined by the productive capacity of its economy (the goods and services its members create). Please discern the difference between real and financial assets."

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Expert Solution

Different between real and financial assets.

The material wealth of a society is ultimately determined by the productive capacity of its economy and productive capacity is affected by both type of assets real and financial assets.

REAL ASSETS-

Real assets are tangible or physical assets that have intrinsic value.
Commodities, Equipment, Natural Resources, Real Estate , Land ,Building, Precious Metals etc. are some example of real assets.
Real assets have economic value to a corporation or an individual so that the material wealth of a society is related to real assets.
Real assets value derives from its physical qualities.
Real assets tend to be more stable but less liquid then financial assets.

FINANCIAL ASSETS-

financial assets are liquidity assets which is easily convertible in liquid form or cash.
financial assets value derives from a contractual right or ownership claim.
cash, bank balance, mutual fund, bonds, stocks, investments account are some example of financial assets.
its intangible or non-physical in nature.
financial assets carry degree of risk because the factors of demand and supply is affect the financial assets.
liquidity is one of the most important factor of financial assets because liquidity is the ability to change a financial assets into cash quickly.

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