Financial instrument

Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership interest in an entity (share), or a contractual right to receive or deliver cash (bond). Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership interest in an entity (share), or a contractual right to receive or deliver cash (bond). International Accounting Standards IAS 32 and 39 define a financial instrument as 'any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity'.