What is the difference between financial and real asset?

Real assets are assets that can be put to productive use to generate a return 

e.g. machinery and equipment

Financial assets are assets that represent a claim to a series of cash flows against an economic unit 

Example:

• Shares

• A claim against a company
• Cash flows = dividends and sale price

• Bonds

• A claim against the bond issuer
• Cash flows = interest and principal

• Bank accounts

• A claim against a bank
• Cash flows = interest and principal

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