Alternative Investment
Alternative investment is considered as an investment outside of the traditional
asset classes of
stocks,
bonds and money market. Some examples of alternative investments include real estate, commodities,
options and
derivatives. These investments are often used by financial institutions, hedge funds, and producers that need to hedge against volatility risk of raw material.
Real Estate: A piece of land, including the air above it and the ground below it, and any buildings or structures on it.
Commodities: This asset class covers a wide range of items which are considered commodities. These items include oil, gold, silver, wheat, coffee and rubber. There are indexes based on a bundle of such commodities.
Option: A contract to buy or sell a specific amount of financial asset at a specific price, at which the contract may be exercised, or acted on. When an option expires, it no longer has value and no longer exists.
Derivative: A contract that derives most of its value from some underlying asset, reference rate, or index. Derivative can be differentiated into several types, including commodity derivatives and financial derivatives.
Related articles: