What are Financial Assets?

A financial market is a marketplace where financial assets like stocks, bonds, and commodities are traded. These markets help businesses and governments raise capital and enable the efficient allocation of financial resources. Financial markets are vital for economic growth.

Fundamental analysis involves assessing a stock’s intrinsic value by reviewing financial statements, industry trends, and economic factors. It helps investors determine whether a stock is undervalued or overvalued, guiding their investment decisions.

Technical analysis involves studying historical price movements and trading volumes to predict future trends in financial assets. It relies on charts and technical indicators and does not consider the intrinsic value of a company.

Risk in investing refers to the chance that actual returns may differ from expected ones, possibly leading to a loss of capital. High-risk investments often offer higher potential returns but are more volatile. Diversification is a key method for managing risk by spreading investments across different asset classes.