The main difference between the two is that physical assets are tangible and financial assets are not. Some physics research can take more than 10 years. Time is important in finance area. … For example the Black-Scholes equation in finance can be exactly transformed into the heat equation in physics. Assets are commonly known as anything with a value that represent economic resources or ownership that can be converted into something of value such as cash. Change ), You are commenting using your Google account. (adsbygoogle = window.adsbygoogle || []).push({}); Copyright © 2010-2018 Difference Between. • Financial assets are recognized at fair value (present value of future cash flow), while physical assets are recognized at cost. While in Finance World, the basic elements are money/price and value. Physics vs. Finance; February 25, 2011 manoj. The research in finance industry can be done in a few months. Econophysics is a heterodox interdisciplinary research field, applying theories and methods originally developed by physicists in order to solve problems in economics, usually those including uncertainty or stochastic processes and nonlinear dynamics.Some of its application to the study of financial markets has also been termed statistical finance referring to its roots in statistical physics. That’s also the reason why many physicists go into finance for career. Fill in your details below or click an icon to log in: You are commenting using your WordPress.com account. Change ), You are commenting using your Twitter account. It is important to note that the papers and certificates that represent these financial assets do not have any intrinsic value (the paper held is only a document certifying ownership and is of no value). Change ), You are commenting using your Facebook account. • Financial assets lose value due to changes in market yields and other market price fluctuations, whereas physical assets lose value due to depreciation, wear and tear. Physicists tend to use the word "fact" in debating. However, financial assets may lose value to changes in market interest rates, fall in investment returns or fall in the stock market prices. Finance scholar like to use the word "make sense" in debating. Very insightful! Many finance models are very similar to the physics theoretical models. @media (max-width: 1171px) { .sidead300 { margin-left: -20px; } } • Financial assets may yield cash flows of return during the time that they are held and a final receipt on the asset’s face value. • Financial assets are intangible, physical assets, on the other hand, are tangible. All the study and research are driven by the nature. Ok let’s compare physics and finance: In Physics World, the fundamental elements are energy/mass (where E=mc^2), time and space. The main similarity between tangible and physical assets is that they both represent an economic resource that can be converted into value, and both assets are recorded in a firm’s balance sheet. ( Log Out /  How are you doing recently? Experiments/Researches are performed to enhance and to prove the theories. Examples of such physical assets include land, buildings, machinery, plant, tools, equipment, vehicles, gold, silver, or any other form of tangible economic resource. Certain tangible assets are also perishable, such as a container of apples, or flowers that need to be sold soon in order to ensure that they do not perish and lose their value. Analysis and research are driven by people. Finance scholar and practitioners are trying to find out the perception and expectation of people. "good debating should stand on good preparation"–I agree with that. Compare the Difference Between Similar Terms. Both assets represent value that can be converted into cash. • physical assets are disposed off when they served for their useful economic life, but financial assets are redeemed when they mature. The "truth" in physics tend to be more objective and obsolute and the "truth" in finance tend to be more subjective and relative. 2. Bless my friends, in both physics and finance!! congratulations on your first blog since you join Clark. Very few PHD in Finance can graduate in 5 years. They usually experience a reduction in value due to wear and tear of the asset through continuous use known as depreciation, or may lose their value in becoming obsolete, or too old for use. Most of finance PhD students finish their degree in less than 5 years. Physical assets usually depreciate or lose value due to wear and tear, whereas financial assets do not experience such reduction in value due to depreciation. That something sounds really exciting to one kind of people does not necessarily sounds exciting to another kind of people. Therefore finance research/analysis is usually done quickly and efficiently. Examples of such financial assets include stocks, bonds, funds held in a bank, investments, accounts receivable, company goodwill, copyrights, patents, etc. Since many easily confuse the two types of assets to be of similar meaning, the following article provides a solid explanation of the difference between the two, and explore a few points that may help readers understand the difference between these two types of assets. Coming from Engineering cum Human Resource Development background, has over 10 years experience in content developmet and management. • Physical assets can be depreciated over their useful life, while financial assets can be revalued. Regardless of the fact that financial assets do not exist in physical form, they are still recorded in a firm’s balance sheet, to represent the value that is held by them. Posted on June 23, 2007 by yuyanwang With both physics and finance background, I have been thinking about this topic for a long time. Never get a chance to write down something—well I guess that’s the excuse, I am just getting too lazy to write… The following are my opinions, welcome any comments. 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