C1T1L1 · Revised 2026-10-26

Decision and objectives

Practical task: Classify four offers before comparing their quoted returns

Objectives: Classify a claim by its enforceable rights; Separate wrapper from underlying exposure; Identify funding obligations beyond purchase cash.

Required prior knowledge: shared foundations; shared foundations. Classification: domestic. Revision: 2026-10-26. All fictional names, prices, rates, fees, calendars and tax schedules below are hypothetical unless explicitly identified as a dated document observation.

A product name is an unreliable starting point. A bank can distribute a fund without owing the fund's investment result. A fund can hold debt without making its unit a promise to repay a fixed amount. Begin with the sentence “I own a right against whom, to receive what, under which conditions?” Then ask what moves its economic value. This separates legal structure from market exposure and prevents the word “cash” from disguising a risky investment.

Mechanics

An ordinary share is a residual ownership claim on a company. Creditors and other senior claims come before the ordinary shareholder in a simplified liquidation. A debt claim specifies payments owed by an issuer, subject to its terms and creditworthiness. A fund unit represents participation in a separately administered portfolio; the investor normally does not select each trade. A derivative contract specifies payments determined by an underlying price or event and can create future obligations.

Write two columns. “Legal claim” identifies rights and responsible entities; “economic exposure” identifies the asset, rate, currency or event that changes value. A Turkish fund holding foreign equities remains a domestic access route to foreign economic exposure. A broker distributing it is a service provider, not automatically its guarantor.

Price and return drivers

A wrapper changes administration, costs and access, but does not make underlying risk disappear. For a fully paid unleveraged share or ordinary fund unit, the investor's purchase loss can approach the cash invested plus investor charges. A linear derivative with a small collateral deposit may lose more than that collateral. Collateral supports performance; it is not the exposure amount or a loss ceiling. Do not use a common “return on cash paid” denominator until these distinctions are explicit.

Worked case

Hypothetical offers all reference TRY 100,000 of economic assets. Company A has assets of TRY 150,000 and senior debt of TRY 60,000: simplified equity residual = 150,000 − 60,000 = TRY 90,000. A fund has TRY 2,000,000 net assets and 100,000 units: each unit is TRY 20. Buying 5,000 units costs TRY 100,000 and represents 5% of outstanding units. A fixed debt claim instead promises a contractual schedule; its current market value need not equal the promised maturity amount.

A hypothetical long linear contract references TRY 100,000 while requiring TRY 10,000 collateral. A 15% adverse underlying change produces TRY 15,000 loss, before costs, exceeding posted collateral by TRY 5,000. These four cash commitments cannot be ranked by a headline percentage without accounting for future funding and legal rights.

Adverse case

Let Company A's assets fall to TRY 50,000 while senior debt remains TRY 60,000. Simplified ordinary equity recovery is max(50,000 − 60,000, 0) = zero; shareholders do not receive a guaranteed fraction of the original assets. If the fund's net assets fall 20% with its unit count unchanged, the unit becomes TRY 16 and the 5,000 units are worth TRY 80,000. Fund asset separation may matter if a service provider fails, but cannot restore an ordinary market loss. Neither example asserts a particular insolvency waterfall beyond the stated simplified assumptions.

Practical use

For a domestic offer, obtain the exact security or fund identifier, governing documents and authorized access route before entering an order. Trace where cash is held before settlement and where the final claim is recorded afterward. The source documents, not a bank logo, identify whether the product is a deposit, security or contract. Cost boundaries differ: fund expenses may already reduce unit value; a share trade can add brokerage and spread; a financed contract adds funding. Tax classification follows the claim, investor and dates, not the marketing label. This lesson applies no actual tax rate.

Decision boundaries

Use this classification before choosing any return formula. Reject a comparison when one offer omits a possible capital call, collateral demand or redemption restriction. A higher apparent return on collateral can simply be greater leverage. Retain an accessible baseline when the investor cannot describe the obligation or fund a plausible adverse case. Classification is necessary but insufficient: two legally identical units can hold very different portfolios.

Practice and references

Exercise: a hypothetical fund has TRY 3,600,000 net assets and 120,000 units. An investor buys 2,000 units. Calculate the unit price, purchase value and ownership fraction; then stress net assets down 25% with no unit flow. Answer: 3,600,000 / 120,000 = TRY 30 per unit; 2,000 × 30 = TRY 60,000; 2,000 / 120,000 = 1.6667%. Stressed unit price is TRY 22.50 and position value TRY 45,000, a TRY 15,000 loss before investor costs. The investor owns fund units, not an individually withdrawable slice of every holding.

Takeaway: classify the right first, then measure the exposure and funding.

Reference guide: ordinary-share; mutual-fund; bank-deposit; ownership-fraction; legal-claim; economic-exposure; counterparty. Next: C1T1L2. Topic test.

Sources: SPK Mutual Funds Introduction Guide — What is a fund; fund expenses; fund types; founder and manager; recorded units; date not stated; retrieved 2026-10-26; checked 2026-10-26; SPK Communique III-52.1 — Articles 3–6, 14–15, 24–27; Annexes 2–3; date 2013-07-09; consolidated text lists amendments through 2024-03-01; checked 2026-10-26; Borsa Istanbul Equity Market Products — BYFs; real-estate certificates; commodity certificates / ALTIN.S1; date not stated; retrieved 2026-10-26; checked 2026-10-26. Source records: sources.json. Check the cited rule dates and confirm current dealing terms before any transaction.

Shared reference guide