CISI Professional Practice Exam 2025 – Complete Prep Guide

Financial assets are indeed best classified as intangible assets that derive value from contractual agreements. This definition encompasses a variety of instruments that represent a claim on future cash flows or ownership in some form, such as stocks, bonds, and derivatives. The core characteristic that distinguishes financial assets is that they are not physical or tangible in nature; instead, their value comes from legal rights or expectations tied to contractual obligations.

For instance, a stock represents ownership in a company, and its value is contingent upon the company's future earnings and market conditions. Similarly, a bond is a loan made to an issuer that promises to pay back a specified amount with interest over time. In both cases, the worth of these assets is derived from financial contracts that outline their terms and conditions.

The other options describe different forms of assets. Physical objects of value and tangible assets refer to real estate, equipment, or commodities that can be physically touched or held, which do not fit the classification of financial assets. The classification of only stocks and bonds is too narrow, as financial assets also include other types such as mutual funds, options, and currencies, thus failing to encompass the broader definition necessary for understanding financial assets in today's markets.