Question

Explain whether the following assets are a real asset or a financial asset.

A certificate of deposit at your local bank

A two-bedroom house

$50,000 worth of bonds from an airline company

Ownership of a copyright to a hit song

Answer 1

A financial asset is a non-physical asset whose value is derived from a contractual claim, such as bank deposit, bonds, stocks, mutual fund units, insurance policy etc.

A real asset is a physical asset such as Land, Building, precious metal, commodities etc. that has value due to its substance and properties.

A certificate of deposit at your local bank

It is a Financial asset as it is a non-physical asset and arises out of a contract between a customer and bank.

A two bedroom house

It is a real asset as it has physical existance

$50,000 worth of bonds from an airline company

It is a Financial asset as it is a non-physical asset and arises out of a contract between a customer and the airline company.

Ownership of a copyright to a hit song

It is an intangible asset. It does not fit into the catgories of real asset or financial asset

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