Answer: Financial assets are the assets that are highly liquid, intangible and whose value is derived from the contract. Whereas the real assets are less liquid and have physical existence as well.
a. A patent is a real asset that is a right to use an idea for specified time and prohibiting others to use this idea.
b. A share of stock issued by Wells Fargo Bank. financial asset because the stock is highly liquid, intangible and its value is derived from stock exchange which value the stock on the basis of firm's performance and its financial position.
c. A blast furnace in a steel making factory is a real asset because it has physical existence.
d. A mortgage loan taken out to help pay for a new home is a financial asset because its value is derived from the contract and is intangible and is also highly liquid asset.
e. After a successful advertising campaign, potential customers trust FedEx to deliver packages promptly and reliably which represents the goodwill of the company. This goodwill is solely related to the firm and is not tradeable which is close to the definition of real assets.
f. An IOU ("I owe you") from your brother-in-law is a financial asset because it is a type of receivable and all the receivables are financial assets because their value is derived on the basis of contract, is highly liquid and is an intangible asset.
The financial asset is those assets that are highly liquid and intangible and there value is derived from the contract. A patent is a real asset and is used for describing a specific time.
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