Which financial instruments are equally applicable to cultural and creative SMEs and conventional SMEs? Financial instruments have the capacity to support and finance cultural/creative and conventional small and medium enterprises (SMEs), the genuine The question is whether all financial instruments are applicable to all SMEs. A financial instrument is defined as “a document that has a monetary value or represents a legally enforceable agreement between two or more parties regarding a right to payment of a sum of money” (BusinessDictionary.com). The different types of financial instruments can be considered as many types of financial assets. Common types of financial assets can be classified into bonds, stocks, loans and derivative financial instruments. Each financial instrument carries its own risks and rewards as well as the standard risks for all financial instruments. Each financial instrument has its advantages and disadvantages to support each SME. The first type of financial instrument is the bond. A bond is “an acknowledgment of debt by the issuer; it represents a fraction of a loan issued by an issuer for which the bondholder receives interest (coupons)” (ING Belgium 6). The general characteristics of bonds contain their markets which are primary and secondary markets. The primary market is the initial issue market and the secondary market is the trading period of the bond. Bonds are issued for a certain duration. If a bond is cashed, traded or sold before the end of the term, the bond does not have the same value as it would have at maturity. Bonds can be divided into two categories; one is by issuer and the other is by type. The issuer's bonds are savings bonds, linear bonds, state savings bonds, corporate bonds and Eurobonds....... middle of paper .... .. stock exchange. They can be adapted to specific customer needs. (ING Belgium 17). Overall, derivative financial instruments are valued based on their relationship with interest rates and different financial values ​​of the moment. The different types of financial derivative instruments have their advantages and disadvantages. One of the advantages of financial derivatives is that many people follow price movements and trades. Another advantage is that “derivatives do not involve risk…. they redistribute risk between different market players” (Finance and Money). Another advantage is that the number of participants reduces transaction costs. Financial derivative instruments also have disadvantages. The downsides consist of increased volatility, high number of bankruptcies and the constant need for regulations..