Financial Instruments:

A financial instrument is a claim against a person or an institution for the payment at a future data a sum of money and/or a periodic payment in the form of interest or dividend.  The term 'and/or' implies that either of the payments will be sufficient but both of them may be promised.

Primary securities and Secondary securities

Financial securities may be primary or secondary securities.  Primary securities are also termed as direct securities as they are directly issued by the ultimate borrowers of funds to the ultimate user.

Financial institution differ in terms of marketability liquidity reversibility, type of options, return, risk and transaction costs.

Financial Services:

Financial intermediaries provide key financial services such as merchant banking, leasing, hire purchase, credit -rating, etc.  Financial services rendered by the financial intermediaries bridge the gap between the back of knowledge on the part of investors and increasing sophistication of financial instruments and markets.