In this chapter we examine the basic types of financial assets. We discuss three broad classes: interest-bearing assets, equities, and derivative assets. Each of these major groups can be further subdivided. Interest-bearing assets include money market instruments and fixed-income securities. The two major equity types are common stock and preferred stock. The two most important types of derivative assets are futures and options.

      For each of the major types of financial assets, we cover three topics. We first describe the basic nature of the asset with an emphasis on what the owner of the asset is entitled to receive. We then illustrate how prices are quoted in the financial press, and we show how to interpret information presented online as well as in The Wall Street Journal. Finally, we indicate, in fairly broad terms, the potential gains and losses from buying and selling each type of asset.