3

When considering investments in currency, I wonder if currency belongs to real assets or financial assets, and why? Thanks!

Note: I learned that assets are divided into real assets and financial assets from Bodie's textbook "Investments".

1

Currencies are a financial asset. Real assets must have a productive capacity. That is, they must be able to produce a good or service. Currencies, in contrast, are actually liabilities of the issuing government. In the case of the US Dollar, each paper bill is marked as a "Federal Reserve Note" which makes it clear that

Legally, they are liabilities of the Federal Reserve Banks and obligations of the United States government.

| improve this answer | |
  • Thanks! So currencies are financial asset, but are they financial instrument? – Tim Sep 20 '11 at 14:04

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.