I. Credit instruments and their types Credit instruments usually refer to certificates issued and circulated in written form to guarantee the rights of creditors or investors. Credit instruments can be divided into financial credit instruments and non-financial credit instruments or direct credit instruments and indirect credit instruments. Typical non-financial instruments include credit sales contracts, letters of credit, etc. Typical financial instruments include credit cards and consumer credit. Direct credit instruments are commercial bills (including bills of exchange, promissory notes, checks, etc.). ), bonds, stocks and mortgage contracts issued or signed by industrial and commercial enterprises, countries and individuals. Indirect credit instruments are bank bills (or paper money), deposit slips, life insurance policies and various bank bills issued by banks and financial institutions. In a narrow sense, credit instruments refer to financial instruments. It refers to the certificate that proves the debt, creditor's rights or ownership relationship between the demander and the provider of funds in the financing activities in the financial market. It is a credit payment tool instead of currency circulation, which has certain monetary nature, is an important financial asset and an important transaction object in the financial market. Therefore, credit instruments are also called financial instruments. With the deepening and expansion of credit in modern economic life, there are more and more types of credit tools. Credit instruments can also be classified from other angles: 1. According to the form of credit, it can be divided into commercial credit instruments, such as various commercial bills; Bank credit instruments, such as bank bills and bank drafts; National credit instruments, such as treasury bills and other government bonds; Securities investment credit instruments, such as bonds and stocks. 2. According to the term, it can be divided into long-term, short-term and irregular credit instruments. There is no absolute standard for the division between long-term and short-term Generally speaking, one year is the boundary, more than one year is the long term, and less than one year is the short term. Short-term credit instruments mainly refer to treasury bills and various commercial bills, including bills of exchange, promissory notes and checks. In western countries, short-term credit instruments are generally called "quasi-currency" because of their short repayment period, strong liquidity and easy realization, which are similar to money. Long-term credit instruments usually refer to securities, mainly bonds and stocks. Informal credit instruments refer to bank bills and most private lending certificates. Two. Elements and characteristics of credit instruments (I) Elements of credit instruments A credit instrument consists of five elements: 1, face value, that is, the face value of the voucher, including face value currency and amount; 2. Maturity date, that is, the latest date when the debtor must repay the principal to the creditor; 3. Term, that is, the duration of the creditor-debtor relationship; 4. Interest rate, that is, the level of income obtained by creditors; 5. Interest payment method; (II) Characteristics of credit instruments Credit instruments are complex and diverse, but they also have some common characteristics, which can be summarized as: 1, profitability. Credit instruments can bring benefits regularly or irregularly, which is the purpose of credit. There are three kinds of income from credit instruments: one is fixed income, which is the income obtained by investors at a predetermined interest rate. For example, when bonds and certificates of deposit expire, investors can get the agreed interest. Fixed income is nominal income to a certain extent, which is the ratio of coupon income to principal of credit instruments. The other is immediate income, also called current income, which is the income obtained when selling at market price. For example, the difference between the buying price and the selling price of a stock is a kind of immediate income. There is also actual income, which refers to nominal income or current income after deducting the decline in purchasing power of money caused by price changes. In real life, actual income does not really exist, but must be recalculated. What investors can access is nominal income and current income. 2. Risk. In order to get income and provide credit, we must take risks at the same time. Risk is relative to security, so risk is security from another angle. Credit instruments refer to the possibility of loss of principal and interest income. Any credit instrument has risks, but the degree is different. Its risks mainly include default risk, market risk, political risk and liquidity risk. Default risk is generally called credit risk, which refers to the possibility that the issuer fails to perform the contract or the company goes bankrupt and other factors lead to the loss of the credit certificate holder. Market risk refers to the possibility that the price of credit certificates will fall and suffer losses due to changes in various economic factors in the market, such as changes in market interest rates, exchange rates and price fluctuations. Political risk refers to the possibility that various political situations such as policy changes, wars and changes in social environment directly or indirectly lead to the loss of credit certificates. 3. Liquidity. Financial instruments can be bought, sold and traded, and can be converted into money, which is liquidity or liquidity. In a short period of time, it is called strong liquidity to be able to sell quickly for money without suffering losses, and vice versa.