The cost of a financial asset and its interest rate are inversely correlated. An investment's interest rate decreases as its value increases. Similar to this, an asset's price increases when its interest rate decreases.
Thus, there is an inverse relationship between financial assets and their interest rate.
<h3>What Is a Financial Asset? </h3>
A financial asset is a liquid asset with value derived from a legal claim to ownership or a contractual right. Financial assets include, among other things, cash, investments in stocks, bonds, mutual funds, and bank deposits.
Assets that facilitate the movement of money. They move money from those who have extra money to those who have not, whether they are people, businesses, or even the government.
A promise or claim on future money is what financial assets are. A financial asset or liability is first valued at fair market value. The type of financial instrument will determine how the subsequent measurement is done. The amortized cost and fair value are both used to measure various categories.
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