Key Terms 1
What are assets?
items of value
What is cryptocurrency?
a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds. Cryptocurrency traders operate independently of a central bank.
What is part ownership in a company called?
A share
Define ethical investment.
When making investment decisions, some people decide to invest only in certain companies or organisations whose products, policies and practices are in line with their own beliefs and values. This is known as ethical investment, which is also known as ‘green’, ‘conscious’, or ‘socially responsible’ investment.
What company has the code: A2M?
The A2 Milk Company Ltd
What is capital gains tax?
a tax on the profits arising from the increased value of assets such as shares or property
What is a dividend?
part of a firm’s profit that is divided amongst shareholders
Frodo invested $5000 in a fund that he cannot access until he retires. Which investment option is this an example of?
Superannuation
Outline TWO reasons why individuals invest.
Individuals invest their savings in order to achieve a future goal, such as the desire for extra income and future security, to pay for a major purchase, to fund a holiday, a child’s education, or to ensure a comfortable retirement. Individuals can also invest to save for their own education.
What company has the code: APT?
Afterpay Ltd
What are blue chip shares?
very safe and secure shares
What is rate of return?
the profit you receive on your investment as a percentage of the original investment
Gandalf invested $5000 in shares. He sold them one year later for $5500 and made a profit of $500.
What is his rate of return.
10%
Formula
Current value - Original Value
_____________________________________ x 100
Original Value
Outline THREE ways individuals can finance their investment.
Individuals can finance their investment through:
– Savings — this is when individuals save up for an investment, which can take some time.
– Borrowing — individuals can borrow funds to pay for their investment. For example, they can get a personal loan or a home loan.
– Superannuation — people can use their superannuation accounts to invest in various options, in order to save up for retirement.
What company has the code: LLC?
Lendlease Group
What is a managed fund?
a pool of money that comes from people who have similar investment goals, and invested in assets such as shares or property, by a fund manager
What is a variable interest rate?
rate that moves up or down depending on market forces.
What is the term used to describe the practice of only investing in certain companies whose products, policies and practices are in line with your own beliefs and values?
Ethical investment
Explain the concept of diversification in relation to investing.
Diversifying your investments means spreading your money across different investment types in order to spread the risk. This is one of the main principles of investing. Put simply, it means ‘don’t put all your eggs in one basket’. Investment history shows that different investment types perform well at different times. No single investment will always be the best, but no single investment type will outperform all others over all periods. By putting all your money into one investment, you run the risk of losing a considerable proportion of the investment. By spreading your money across a range of different investment types, the risk of a fall in the value of your overall investments can be reduced. A diversified strategy generally provides a greater return.
What company has the code: WBC?
Westpac Banking Corporation
What is a debenture?
a document that is issued by a firm when you lend it money. It states the amount, interest and term of the investment. If a firm is liquidated debenture holders are one of the first to be repaid.
What is an unsecured note?
Similar to a debenture. A document that is issued by a firm when you lend it money. It states the amount, interest and term of the investment. An unsecured note holder is one of the last to be repaid if a firm is liquidated
A professional investment manager invested a pool of money from a group of people in a variety of assets. Which investment option is this?
Managed fund
Outline the role of the Australian Securities and Investments Commission (ASIC).
ASIC is an independent Australian government body that acts as a corporate regulator. ASIC’s role is to enforce and regulate company and financial services laws to protect Australian consumers, investors and creditors. This government agency is important, as its role is to maintain the financial system and monitor investment practices, which directly impacts our nation’s wealth.
What company has the code: NEC?
Nine Entertainment Co. Holdings Ltd