We usually think of assets as stocks, bonds, bank accounts, real estate, mutual funds, and other securitized instruments. Stocks are documents that grant rights to their owners, rights that relate to a particular company. • Companies are legal entities recognized by federated corporations (countries, states, municipalities, each other, persons, …) – Hard assets (equipment, factories, …) – Soft assets (processes, patents, secrets, …) – Operate in uncertain markets, thus have risk – Risk needs to be divided and shared, to reduce it • Companies thus sell financial instruments (virtual assets, ideas) – Stocks and Bonds, for “Cash” or “Credit” • Cash is a Promissory note to pay some form of value (capital) • Value is “created” by the signatures of the executors – Exchanged for either “shares” or “promise of coupon” – Shares pay dividends and / or have “growth” – Bonds pay interest and have “stability” – Promise of future performance determines market value of inst...
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