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."
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.