ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In financial markets, period of maturity more than five years of financial instruments is classified as long-term. Generally, a time frame for investing in which an asset is held for at least seven to ten years. The measure of a “long term” time frame can vary depending on the asset held or the investment objective.

Detailed explanation-2: -Long-term finance can be defined as any financial instrument with maturity exceeding one year (such as bank loans, bonds, leasing and other forms of debt finance), and public and private equity instruments.

Detailed explanation-3: -Financial instruments may be divided into two types: cash instruments and derivative instruments. Financial instruments may also be divided according to an asset class, which depends on whether they are debt-based or equity-based. Foreign exchange instruments comprise a third, unique type of financial instrument.

Detailed explanation-4: -Most financial instruments fall into one or more of the following five categories: money market instruments, debt securities, equity securities, derivative instruments, and foreign exchange instruments.

Detailed explanation-5: -Some common examples of short-term investments include CDs, money market accounts, high-yield savings accounts, government bonds, and Treasury bills. Usually, these investments are high-quality and highly liquid assets or investment vehicles.