Financial Instruments

‘Financial instruments’ is just a fancy term for the products that financial institutions – banks, brokerage firms, RBI – offer. Examples may comprise FD, equity, bonds, options, or your mother’s favourite RD. These can be created (making a fixed deposit at your bank), traded (buying a stock), modified (extending the maturity date for a mutual fund) or settled (redeeming your FDs so that you can pay for the marriage you never wanted).

Securities are also financial instruments but the ones that can be traded. So, you FD isn’t a security but your stocks are!