1. Issuer
Any financial product must have its sellers and issuers. The issuer of the bond is the debtor, and the debt relationship without the debtor is naturally unimaginable. The same is true of stocks. There must be a specific issuing enterprise, which is the property of the stock subscriber. Issuers earn income by selling financial products, but not any individual or enterprise can earn income by issuing financial products to the society. Corresponding to this kind of financial income is the obligation that the issuer should bear.
In order to ensure the fulfillment of these obligations, most issuers of financial products must meet certain conditions when issuing, and accept the supervision of financial management institutions and investors after issuing (such as information disclosure, certain restrictions on business activities, etc.). ).
When designing financial products, fund-raising enterprises must first find out which products they have the right to issue. Investors should also make clear whether the other party has the right to issue such products before subscribing for wealth management products.
2. Subscribers
Not all investors can buy any financial products they want from the financial market. Some markets (such as interbank lending market) are only open to a few financial institutions. Therefore, before investors subscribe for a wealth management product, they should first know whether they have the right to buy this product, and enterprises should also know the potential investors of this product before issuing a wealth management product, so as to estimate the potential sources of funds.
3. Time limit
Wealth management products have different maturities. Under normal circumstances, the term of products in the money market is relatively short, and the term of products in the capital market is relatively long.
The term of wealth management products can also be divided into finite and infinite. Most bonds and all money market products have maturity dates. As for the stock, theoretically speaking, it is indefinite, and its existence time is as long as that of the enterprise.
Fund-raising enterprises should choose financial products with appropriate maturity according to their needs. For investors, the time limit for subscribing wealth management products should also be determined according to the investable years of their funds. If it is too short or too long, the interest rate will fall or rise respectively.
4. Price and income
Price is the core element of financial products. Because the fundraiser sells financial products in order to obtain the income equivalent to the product price, the investment amount of investors is exactly equal to the price of financial products of other buyers.
In the price of financial products, the par price and the market price should be distinguished.
The nominal price is the nominal price stipulated in the contract. The face value of a bond is usually equivalent to the principal, and together with coupon rate, it forms the basis of interest for each period. The par value of a stock is used to calculate the registered capital in the balance sheet of an enterprise.
Market price is the transaction price of financial products in the market, which is equivalent to the price paid by subscribers and issuers.
Market prices are also divided into primary market prices and secondary market prices. There is a certain relationship between the price in the primary market and the face price. For example, the relationship between the face value of bonds and the market price depends on the difference between coupon rate and the market interest rate, the repayment method of bonds, the repayment period of bonds and other factors. However, in the secondary market, the change of market price is no longer limited by the par price.
Rate of return is another core element of financial products, which indicates the ratio of the income brought by products to the investment of holders. There are two kinds of income of wealth management products: one is the interest income of securities, which is referred to as income or recurring income, and the other is capital gain or profit and loss. Interest income refers to the interest income obtained during the holding of wealth management products, such as the income from paying bond interest or stock dividends. Capital gains or losses refer to the appreciation or impairment of the principal due to the fluctuation of the price of the securities held.
5. Risk
Generally speaking, risk is considered as a kind of danger or the possibility of loss or failure. It can be considered that the investment risk of financial products is the possibility of expected income loss due to uncertainty about the future. There are four kinds of investment opportunities in the market, which are a combination of risk and return:
(1) High risk and low return.
(2) Low risk and high return.
(3) High risk and high return.
(4) Low risk and low return.
For investors, if they want to get high returns, they must bear high risks, and high returns are bound to be accompanied by high risks. On the other hand, if investors take high risks, they may not be able to guarantee high returns, because the meaning of high risks is uncertain. The result of high risk may be high income, low income or even high loss. The benefits are obviously at the cost of risk.
6. Asset liquidity
Liquidity is the ability to convert assets into money. An asset can be converted into money as long as it is needed, with low transaction cost and no loss of principal. On the contrary, assets are illiquid.
Most financial products can circulate freely in the secondary market, such as privately held common stocks and bonds. However, some wealth management products cannot be circulated, or certain conditions must be met when circulating, such as ordinary time deposit books cannot be circulated, wealth management products used as collateral, and all products that are not allowed to be circulated at the time of issuance. There are also some wealth management products that can only be circulated under certain circumstances.
Liquidity is a major quality index of financial products, and those financial products that cannot be circulated can only be issued at lower prices in the market. By the same token, even financial products that can be circulated can only be circulated at a lower price if their circulation conditions are poor (for example, the daily turnover is extremely small).
7. strength
As a kind of property right certificate, financial products can give holders the rights corresponding to the product category. For example, bondholders, as creditors, have the right to obtain principal and interest at maturity, as well as the priority claim for the remaining property when the company goes bankrupt. As shareholders of the company, shareholders have the right to attend the shareholders' meeting, elect the directors of the company and participate in the decision-making on major issues of the company.