capital
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Financial capital generally refers to the net financial wealth and investor has available to operate his business. Financial resources available for use. |
This is the most general definition. Capital may also be considered as a measure of financial strength. Often it implies more specifically material wealth used or accumulated for the production of more wealth, such as land or labor in addition to factors of production. Capital may refer to wealth owned by an individual, government, or business.
Capital is often divided into two general categories (originally by classical economist David Ricardo): fixed capital and circulating capital. Fixed capital, or capital instruments, includes assets such as buildings, machines, equipment, and roads that are permanently and continuously employed in the production of other goods. Circulating capital consists of more short-lived factors of production such as food or fuel. Another way of categorizing capital is between specialized and unspecialized capital. Unspecialized capital includes raw materials, such as lumber, that can be used for any type of production. Specialized capital refers to items designed for a specific purpose, such as railway equipment.
More specific types of capital include financial, natural, infrastructural, and human capital. Financial capital represents obligations that may eventually be liquidated as money and are traded in financial markets. Examples include stocks and bonds. Natural capital lies within ecosystems as materials that aid in the support of life, for example a river that keeps the crops of a farm hydrated. Infrastructural capital is manmade and installed support for the accumulation of wealth, coming in the form of shelter, roads, and computers, for example. Human capital develops from investment in the training and education of the population. Specific types include social capital (the value of relationships between individuals within an economy) and individual capital (generally thought of as innate talent or leadership qualities).
Often capital is required as insurance on investment. For example, banking regulatory agencies enforce required minimum capital stocks for bank operations, designed to manage the risk taken by patrons. Similarly, in forex trading investors must meet a minimum required base of wealth in order to undertake the risk of trading currency.
Capital is often divided into two general categories (originally by classical economist David Ricardo): fixed capital and circulating capital. Fixed capital, or capital instruments, includes assets such as buildings, machines, equipment, and roads that are permanently and continuously employed in the production of other goods. Circulating capital consists of more short-lived factors of production such as food or fuel. Another way of categorizing capital is between specialized and unspecialized capital. Unspecialized capital includes raw materials, such as lumber, that can be used for any type of production. Specialized capital refers to items designed for a specific purpose, such as railway equipment.
More specific types of capital include financial, natural, infrastructural, and human capital. Financial capital represents obligations that may eventually be liquidated as money and are traded in financial markets. Examples include stocks and bonds. Natural capital lies within ecosystems as materials that aid in the support of life, for example a river that keeps the crops of a farm hydrated. Infrastructural capital is manmade and installed support for the accumulation of wealth, coming in the form of shelter, roads, and computers, for example. Human capital develops from investment in the training and education of the population. Specific types include social capital (the value of relationships between individuals within an economy) and individual capital (generally thought of as innate talent or leadership qualities).
Often capital is required as insurance on investment. For example, banking regulatory agencies enforce required minimum capital stocks for bank operations, designed to manage the risk taken by patrons. Similarly, in forex trading investors must meet a minimum required base of wealth in order to undertake the risk of trading currency.