Fungible: Difference between revisions
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====Examples==== | ====Examples==== | ||
For example shares in a company can be described as fungible as you can replace those shares with other equivalent shares in the same company. However, shares of an | For example shares in a company can be described as fungible as you can replace those shares with other [[equivalent]] shares in the same company. However, shares of an “equivalent” value in another company would not be considered a valid replacement. | ||
Money can also be considered a fungible asset. If you borrow £10 from someone, you do not need to give the same £10 note back. You could give that person another £10 note, or two £5 notes, or any combination of coins that add up to £10 (as long as they are happy to accept that | Money can also be considered a fungible asset. If you borrow £10 from someone, you do not need to give the same £10 note back. You could give that person another £10 note, or two £5 notes, or any combination of coins that add up to £10 (as long as they are happy to accept that many coppers!) | ||
Revision as of 10:37, 16 September 2016
Definition
Assets are fungible where their nature allows them to be replaced in whole or in part with other assets of a like nature. However, it applies only to the equivalence of each unit of a commodity with other units of the same commodity. Fungibility does not describe or relate to any exchange of one commodity for some other, different commodity.
Examples
For example shares in a company can be described as fungible as you can replace those shares with other equivalent shares in the same company. However, shares of an “equivalent” value in another company would not be considered a valid replacement.
Money can also be considered a fungible asset. If you borrow £10 from someone, you do not need to give the same £10 note back. You could give that person another £10 note, or two £5 notes, or any combination of coins that add up to £10 (as long as they are happy to accept that many coppers!)