cRYPTO Glossary

An asset class is a classification of investments based on common traits, behaviors, and legal characteristics.

Explanation of Specific Terms:

• Investments: Financial instruments or assets purchased with the expectation of generating income or profit.
• Common traits: Shared characteristics among assets within the same class, such as risk level, return potential, and market dynamics.
• Behaviors: How assets typically perform under different market conditions, economic cycles, or regulatory environments.
• Laws: Legal frameworks and regulations that govern the ownership, transfer, and taxation of assets within a specific class.

Key Points for Beginners:

• Types of asset classes: Common asset classes include equities (stocks), fixed income (bonds), cash equivalents (money market instruments), real estate, commodities, and alternative investments (e.g., private equity, hedge funds).
• Diversification: Asset classes serve as building blocks for constructing diversified investment portfolios, spreading risk across different types of assets to manage overall portfolio risk.
• Investment strategy: Investors often allocate their capital across various asset classes based on their financial goals, risk tolerance, and investment horizon.