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A financial asset is intangible property that represents a claim on ownership of an entity or contractual rights to future payments. Common types of financial assets are cash, stocks, bonds, bank deposits, options, futures contracts and derivatives. For a financial institution such as a bank, its financial assets are the loans it makes to borrowers. 

Financial assets are highly liquid and thus can be easily converted into the most liquid of financial assets – cash.

The value of a financial asset is determined by a number of factors, which include the supply and demand for the financial asset in the market in which it is traded, as well as the risk associated with that asset. 

Financial assets provide a much more efficient means for businesses to acquire capital, and thus help spur the economy. Investors are more willing to invest their money in a financial asset to fund a business when they know that their investment has a readily available market that will convert it to cash if necessary.

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