The Diversity of Financial Instruments Traded on the Stock Exchange

Iulia-Oana Belcic-Stefan
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Iulia-Oana Belcic-Stefan: University of Craiova Faculty of Economics and Business Administration

Finante - provocarile viitorului (Finance - Challenges of the Future), 2015, vol. 1, issue 17, 122-132

Abstract: The present study aims to accomplish an in depth analysis of the types of financial instruments traded on the stock exchange, showing in detail both their characteristics and their implications in terms of expected earnings but also the level of associated risk. Depending on the timeframe considered and their own aversion to assumed risk, investors must realize optimal selection of the financial instruments in which they aim to place their funds. Thus, for a long-term investor who does not want to assume a high risk is indicated purchasing bonds, government securities or structured products such as capital protected certificates. If the same long-term investor decides that he can take a higher risk in order to obtain higher gains, he can choose to purchase shares or structured products such as index certificates. The third situation targets investors who seek to obtain short-term gains, but with certain aversion towards the level of assumed risk, for whom is recommended to purchase ETF fund units. At the same time, experienced investors pursuing short-term placement of funds and obtaining substantial gains regardless of the level of risk assumed opt, generally, for structured products such as turbo certificates or derivative financial instruments such futures and options.

Keywords: financial instruments; stock exchange; investors; timeframe; risk (search for similar items in EconPapers)
JEL-codes: G23 G28 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:aio:fpvfcf:v:1:y:2015:i:17:p:122-132

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