Derivatives
Commodities and real estate can be described as real assets, as mentioned earlier. Money market securities, stocks, and bonds are one step removed from reality as their owners have a financial asset rather than something tangible. Even investors in secured bonds don’t have a real asset unless a borrower defaults.
Take another step back, and you’ll encounter derivatives. These contracts derive their value from a real or financial asset. Derivatives are traded on gold, other commodities, real estate, currencies, interest rates, notes, bonds, stocks, and indexes that track one or more of these assets.
We ran into futures contracts, ...
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