Financial Terms Explained

Government Departments and Agencies

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

AFSL

See Licensed providers.

Agent

A person employed to act on behalf of another (a principal).

Amortisation

Paying off an interest bearing liability by gradual reduction through a series of installments comprising both principal and interest components, as opposed to paying it off by a single lump-sum payment. A technique for gradually extinguishing a liability or capital expenditure over a period of time (e.g. as in a typical home mortgage).

Aggressive Portfolio

A portfolio which is significantly different from the index (or its benchmark) and which is designed to provide above-average returns by taking above-average risk. Typically, such portfolios have a relatively high exposure to equity investments.

Analyst

A trained person who investigates all the facts concerning a security or industry under study and reaches a dependable conclusion about its merits that may help an investor to decide what action he or she should take.

Asset Backing

The value of a company's assets standing behind its issued shares. Some companies may have a strong asset backing even if the dividends they pay on shares are relatively low. (See also Net Asset Backing).

Asset Class

A broadly defined category of financial assets (eg. domestic shares, overseas bonds, cash, etc).

Assets

The resources owned by a company, fund or individual. Cash, investments, money due, materials and inventories are called current assets; buildings and machinery are known as fixed assets; and patents and goodwill are known as intangible assets. Opposite of liabilities.

Australian Stock Exchange (ASX)

The national organisation for dealing in shares, bonds and certain other securities. The Australian Stock Exchange Limited commenced operations in 1987, replacing the previous State-based exchanges.

Average Weekly Earnings (AWE)

A measure of wage and salary levels of employees in Australia, published monthly by the Australian Bureau of Statistics. AWE is one of the key measures used by economists to assess the state of the economy, particularly to gauge the overall level of activity and potential inflationary influences. (See also Average Weekly Ordinary Time Earnings).

Average Weekly Ordinary Time Earnings (AWOTE)

Similar to Average Weekly Earnings except that overtime earnings are excluded, making it a less volatile measure in the short term but a less accurate measure in the long term.

Award

An industrial agreement between employers and employees, ratified by a State or Commonwealth Industrial Tribunal, setting out salary levels and terms and conditions of employment.

Balanced Fund

An investment portfolio which diversifies its holdings over a range of asset classes which typically include shares, fixed interest, property, overseas securities and cash.

Basic Rate

Applied to loans commonly called 'No Frills Loans' which have are generally cheaper than Standard Variable Rate Loans but do not have features such as a redraw facility or mortgage offset.

Blue Chip

Referring to the shares of a leading company which is known for excellent management and a strong financial structure. The term has become a generic one for quality securities.

Broker

An agent who handles investors' orders to buy and sell securities, commodities, insurance policies or other property. For this service, a commission is charged which, depending upon the broker and the amount of the transaction, may or may not be negotiated.

Brokerage

A fee charged by a broker for the execution of a transaction; or alternatively an amount per transaction or a percentage of the total value of the transaction. Sometimes also referred to as a commission or fee.

Bottom

See Trough.

Building Society

A type of non-bank financial institution, established principally for the purposes of providing bank-type savings vehicles and home finance to individual borrowers. Building societies are regulated by the Australian Financial Institutions Commission and individual State-based supervisory bodies.

Business Cycle

An irregular but recurring period of indeterminate scope and origin embracing expansion, prosperity, recession, and recovery. (See also Economic Clock).

Buyer's Market

A condition of the market in which there is an abundance of goods available and hence buyers can afford to be selective and may be able to buy at a lower price than had previously prevailed. (Opposite of Seller’s Market).

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Capital Gain/Loss

The difference between the sale price of a capital asset and its cost.

Capital Gains Tax

A tax on the increase in the capital value of investments, payable when the capital gain is realised. Capital gains tax is indexed so that nominal increases in value due to inflation are not taxed as well. The taxation regime also allows capital losses to be offset against other taxation liabilities (eg. income tax) in certain circumstances. Most pooled superannuation trusts accrue either fully or in part the liability for capital gains tax on the assets held even though those gains may not yet be realised.

Capital Growth

Appreciation in the capital or market value of an investment, as opposed to income which may be received from the investment from time to time, such as dividends in the case of share investments.

Commission

The broker's basic fee for purchasing or selling securities (or property) as an agent. This fee is generally negotiated. Also known as Brokerage.

Company

A legal entity regulated by the Australian Securities Commission under the Corporations Law. Also referred to as a Corporation. Companies can take a number of different forms, including a:

• company limited by shares, where shareholders' liability is limited to the amount of unpaid shares;
• company limited by guarantee, where liability is limited to an amount prescribed in the company's memorandum of association;
• no-liability company (restricted to mining companies only);
• proprietary limited (or private) company, where shareholding is restricted to a small number of shareholders and restrictions are placed on transfers of shares.

Compounding

The arithmetical process of determining the final value of an investment or series of investments when compound interest is applied ie. when interest is earned on the interest as well as on the initial principal. Investment returns are typically compounded, so two consecutive periods of 10% returns results in a compound return of 21%. (See also Annualising).

Compound Interest

A method of interest calculation where, in each period, interest is calculated on both the principal and interest previously accrued. Henry Ford once said that compound interest was 'the eighth wonder of the world'. (Opposite of Simple Interest).

CPA

Abbreviation for Certified Practicing Accountant, a member of the Australian Society of Certified Practicing Accountants.

CPI

Abbreviation for Consumer Price Index.

Credit Union

A type non-bank financial institution for personal savings and loans, structured on a co-operative basis. Historically, credit unions were established on the basis of a common bond among their membership, (e.g. workplace, local community, and existed to provide savings and personal loan facilities) to their members. Many have now diversified their activities and grown into significant institutions within their respective localities or States. Regulated by the Australian Financial Institutions Commission and individual State-based supervisory bodies.

Current Account

The part of Australia's Balance of Payments relating to imports and exports of goods and services and the net effect of income received and payments made on Australia's foreign debt and investments. A Current Account Deficit means that the sum of all these activities yields a negative figure. (See also Capital Account).

Dealer

See Licensed providers.

Dealer's License

A license issued by the Australian Securities Commission under the Corporations Law to a person in the business of dealing in debentures, shares, prescribed interests and options. The license will invariably be subject to conditions, including liquidity requirements.

Deficit

An excess of expenditure over income or revenue. Opposite of Surplus.

Deflation

A general price decline during which consumer spending is substantially curtailed, bank loans contract and the amount of money in circulation is reduced. It is the opposite of inflation and generally applies to more than just a temporary decline. The early 1990s saw some evidence of deflation, particularly in financial asset and property prices.

Depreciation

The writing-down of the cost of an asset systematically over the life of that asset.

Depression

A prolonged slump in economic activity, characterised by rising unemployment and serious falls in production and consumption of goods. (See also Recession).

Disclaimer

A statement which may allow a person or corporation to avoid liability, if before or at the time of giving advice, that person or corporation makes it clear that he or she accepts no responsibility for his or her statement. Disclaimers are often found in disclosure documents (eg. prospectuses for collective investment products), to the effect that the manager of the product does not guarantee the level of performance of the fund or the return of capital to investors.

Diversification

The spreading of investment funds among classes of securities and localities in order to distribute and control risk. This is a fundamental law of investment, meaning simply: 'don't put all your eggs in one basket'.

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Establishment costs

The cost involved in setting up a facility (see also front-end-fees).

Establishment Fee

Also called Application Fee. Fee which covers basic costs in setting up loan from initial interview to loan drawdown. Some lenders choose to absorb this fee.

Exit Fee

A fee charged in relation to some pooled investments for redemptions of units (withdrawals) by unit holders. (See also Redemption Fee).

Fees

See exit fees, front-end fees, commissions and MERs.

Financial Planning

The process of providing comprehensive advice and assistance to a client for the purpose of meeting a client's financial needs and life goals. The process normally includes six steps: data gathering, goal setting, identification of financial issues, preparation of written options and recommendations implementation of the client's decision, and periodic review and revision of the plan.

Financial services guide

This is a regulated guide that applies to financial services.
In general a Financial Services Guide must be given to a retail client by a provider of financial services (or their authorised representatives) to a retail client before the service is provided.

Fiscal Policy

The aspect of Government economic policy dealing with tax, welfare payments and government expenditure. (See also Monetary Policy).

Fixed Rate

The rate applied to Honeymoon (Introductory Loans) which is fixed at a set rate which will not change for the duration of the honeymoon rate period.

Front End Fee

A fee charge to a borrower at the commencement of a loan, or a commission levied on an investor to buy into a unit trust. Also known as front-end load.

Front Office

A term that refers to the main business activities of a company, as opposed to the operational or 'back office' operations. For example, the front office of an investment bank comprises the analysts, dealers and traders, while the back office comprises the accounting, reporting and support operations. A clear demarcation between front office and back office helps ensure that appropriate Chinese Walls exist within a financial services organisation and that its business activities are properly accountable and appropriately monitored and recorded.

Gearing

A measure of indebtedness, that is the extent of borrowings as against the equity held by a person or company in an asset. It also includes the ability to increase exposure by investing in futures contracts without making the underlying cash available. (See also Leverage).

GNP

Abbreviation for Gross National Product.

Gross

The total, before deductions have been taken away. (Opposite of Net).

Gross Domestic Product (GDP)

A measurement in dollar terms of the aggregate goods produced and services provided within an economy over a year and excluding income earned outside the country. Considered one of the main yardsticks of the health and vitality of an economy. (See also Gross National Product).

Gross National Product (GNP)

An economic statistic which includes GDP plus any income earned by residents from their overseas investments, minus income earned within the domestic economy by overseas residents.

Growth Assets

A general term for assets such as shares and property, which provide investment returns, (comprising both capital growth and income), which outperform inflation. Growth assets compare to debt securities such as fixed interest and/or cash investments.

Growth Investor

One who seeks capital gain from expected further growth in company earnings. Typically, growth investors care less about price/earnings ratios and other valuation measures and more about earnings growth.

Headline Inflation

The published overall inflation rate, unadjusted for non-economic factors, as opposed to underlying inflation.

Home Equity Loan

A home equity account gives you a revolving line of credit secured by the value of your house.
This allows you to use the funds for any other purpose such as the purchase of a second property, or shares or other investments.
The interest rate is generally higher than a standard variable rate, and these accounts are not suitable for everyone.

Household Sector

The part of the economy which is made up of individuals, families, etc. as distinct from businesses and government enterprise.

Hyperinflation

A state of excessive inflation.

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Indicator

A signal or statistic used to predict the value (or movement in the value) of another variable. For example, change in Average Weekly Earnings might be an indicator of a movement in the inflation rate.

Industrial Relations Commission (IRC)

The Federal Government organisation responsible for the prevention, conciliation and arbitration of industrial disputes, in particular disputes related to federal awards.

Interest

The return earned on funds which have been loaned or invested, that is the amount a borrower pays to a lender for the use of his/her money. (See also Compound Interest and Simple Interest).

Interest Rate Cycle

A business cycle concerned specifically with the rise and fall of interest rates. Using historic interest rate cycles and other economic indicators, business analysts attempt to construct yield curve forecasts.

International Monetary Fund (IMF)

An international organisation founded in 1947 to promote maintenance of equilibrium in the balance of payments among the various nations of the world. The functions of the IMF include the levying of quotas on member nations to create a pool of funds available to be loaned to nations facing balance of payments problems.

Investment

An asset acquired for the purpose of producing income and/or capital gains for its owner.

Investment Analyst

A financial expert trained to analyse the activities and future prospects and earnings of companies and securities for the purpose of investment.

Investment Environment

The general economic, political, legal and market conditions within which an investment is made.

Investment Manager

An organisation that specialises in the investment of a portfolio of securities on behalf of individuals and/or organisations subject to the guidelines and directions of the investor. Investment managers offer both pooled investment products and individual portfolios to a range of clients including superannuation funds, institutions and individual investors.

Investor

A person whose principal purpose is to invest money prudently and productively over the longer term with the investment objectives being achievement of a reasonable return and capital appreciation to preserve purchasing power. The opposite of a Speculator, who will sacrifice safety of principal for the possibility of larger gains.

Lagging Indicators

Economic variables which tend to follow movements in the economy as a whole (e.g. trade figures) and whose publication confirms things that have already happened rather than pointing to emerging trends. (Opposite of Leading Indicators).

Leading Indicators

Economic variables which are seen as anticipatory of future trends or expectations (e.g. share prices, currency movements), as opposed to indicators which are based on retrospective or historical statistics. (Opposite of Lagging Indicators).

Licensed providers

One of the significant effects of the Financial Services Reform Act is to introduce a uniform licensing scheme for people who engage in financial advice or provide financial services. For instance, if a person holds an Australian financial services license (AFS license), they are obligated to provide a Statement of Advice or Financial Services Guide commences after a person obtains an AFS license.

Liquidity Cycle

An economic observation of the way asset prices rise or fall in relation to cyclical movements in interest rates over a business cycle.

Loan to Value Ratio (LVR)

Refers to the maximum amount lenders will approve against the value of any property taken as security for your home loan.
For example if you wish to purchase a property worth $100,000 the lender may approve a loan for 80% of the property value. It will then be up to you to provide the remaining 20% plus costs (mortgage registration and stamp duty etc).

Macro Economics

Economic analysis concerning broad trends and influences on the economy, such as the interaction of fiscal and monetary policies, GDP, balance of payments, etc; as opposed to micro economics, which focuses on individual units such as companies and markets to assess their influence on the economy.

Marginal Tax Rate

The rate of tax payable on the top proportion of income derived by a person.

Market Cycle

A business cycle concerned specifically with rises and falls in market activity, as measured by an index. Market cycles generally correspond to the economic clock, with periods of heavy purchasing indicating growth, and periods of heavy selling indicating recession.

Micro Economics

Economic analysis dealing with individual companies or markets and their impact on the economy, as opposed to macro economics which focuses on broader influences and trends.

Monetary Policy

Reserve Bank actions to influence the availability and cost of money. In tandem with fiscal policy, monetary policy is one of the chief arms of Government economic policy. Tight monetary policy usually means higher interest rates as the scarcity of money prevails, whereas loose monetary policy is the reverse.

Mortgage

A form of security for a loan, in which a specific item of property is pledged by the borrower (mortgagor) to the lender (mortgagee).

Mortgage Offset

Offset accounts can help reduce your tax bill by offsetting taxable income from deposit accounts against interest paid in after tax dollars on mortgage repayments. However, not all offset accounts are equal, with many not paying the same interest as you are charged on your mortgage.

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National Accounts

Figures published annually in the Commonwealth Budget summarising income and expenditure for the economy as a whole and for various industry sectors. National account figures form part of the basis for calculating Gross Domestic Product.

National Companies and Securities Commission (NCSC)

The former national regulatory authority for Australian companies and the securities and futures industries. Replaced by the Australian Securities Commission following commencement of the Corporations Law in 1991.

National Savings

The total level of savings, defined as the income remaining after consumption, of a country's households.

Negative Gearing

The purchase of an investment using borrowed funds, where the interest on the borrowing exceeds the income derived from the investment. For tax purposes, this negative net income can be offset against income gained from other sources. Negative gearing is most often associated with purchases of investment real estate, but can also apply in the case of shares or managed investments.

Net

The figure remaining after all necessary deductions have been taken away. Opposite of Gross.

Net Profit

The profit earned by a company less expenses such as tax and interest on borrowings. (See also Earnings Before Interest and

Portable Loans

A portable loan allows you to sell your house and move to a new one without having to refinance. This saves application and legal fees. Most lenders however insist that the loan amount is the same or less. Make sure you know the terms of your loan.

Prices Surveillance Authority (PSA)

The former Commonwealth Government agency responsible for administering legislation concerning prices, and merged in 1995 with the Trade Practices Commission to form the Australian Competition and Consumer Commission.

Product Disclosure Statement (PDS)

This is a regulated statement that applies to financial products.
In general a Product Disclosure Statement must be given by a licensed provider to a retail client where:

• a recommendation is given to acquire a financial product; and
• an offer is made for a financial product.

Proper Authority

An instrument under the Corporations Law which signifies the responsibility of a securities dealer or investment adviser for acts of an employee or agent. Proper authorities are required to be provided to certain categories of employees of fund managers sharebrokers and investment advisers. (See also Dealer’s License).

Prospectus

A legal document lodged and/or registered with the Australian Securities Commission setting forth the complete history and current status of a security issue or fund, and which must be made available to all interested investors in advance of their investment, when an offer is made to the public.

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Rate of Return

The income yield earned in relation to a capital amount invested.

RBA

Abbreviation for Reserve Bank of Australia.

Real Estate

Property in land, building or housing, as distinct from personal property (eg. cars); also known as physical property to distinguish itself from Property Trusts.

Realise

To sell an asset (usually when it appears to have appreciated to the maximum extent that can be reasonably expected).

Real Interest Rate

The nominal interest rate less the prevailing rate of inflation.

Real Rate of Return (RROR)

An inflation-adjusted return. (See also Nominal Return).

Redraw Facility

A redraw facility allows you to make additional repayments on your mortgage, and then have access to the additional repayments if you need to. Make sure you understand the conditions attached to the redraw facility that can include a minimum amount and a fee every time you use it.

Refinancing

The practice by a company of retiring existing securities by the issue of new securities to save interest costs, consolidate debt or lengthen maturities, or some combination of these three goals.

Reflation

Restoration of deflated prices to a desirable level. When Governments reflate, additional money is printed, adding to the supply of money in circulation.

Reserve Bank of Australia (RBA)

Australia's central bank; came into being in 1959 when the central banking activities of the Commonwealth Bank of Australia were transferred to the new entity. The RBA's role combines that of guardian of the financial system and confidant to the Federal Government. It has responsibility for the banking system and authorised dealers, as well as overseeing the activities of Australia's financial markets.

Retail Investment Products

Investment funds that are structured to accept investments from individuals. These funds are pooled and invested by an investment manager. A number of different types of funds exist aimed at meeting the investment requirements of individuals. (Opposite of Wholesale Investment Products).

Return

The amount of money received annually from an investment, usually expressed as a percentage.

Risk

In its simplest sense, risk is the variability of returns. Investments with greater inherent risk must promise higher expected yields if investors are to be attracted to them. Risk can take many forms, but a major one is Valuation Risk paying too much for an asset. (See also Currency Risk, Exchange Risk, Exposure Risk, Market Risk, Operations Risk, Political Risk, Volatility).

Risk Aversion

The tendency to require a relatively high return in order to compensate for risk, or uncertainty, in the result. Risk averse investors will tend to settle for a relatively low-risk portfolio, where the return is more predictable.

Risk-Free Asset

An investment with no chance of default, and a known or certain rate of return. Typically in Australia the 90 day Treasury Note is used as a risk-free standard.

Risk-Free Rate of Return

A theoretical return that is earned with perfect certainty; it is without risk. In Australia, the risk-free return is approximated by reference to 90 day Treasury Note yields.

Risk Management

The monitoring and controlling of various risk factors in an investment portfolio with the aim of minimising volatility of investment returns.

Risk Premium

The extra yield over the risk free rate demanded by investors to compensate them for holding a riskier asset. This is an extremely important concept in relation to setting a long-term asset mix. (See Equity Risk Premium).

Risk-Return Spectrum

A concept used to illustrate that, in a rational marketplace, higher anticipated rewards are accompanied by incremental increases in risk (measured as the standard deviation of returns). The left end of the spectrum represents the lowest risk investments typically short-term government securities. Moving to the right on the spectrum, each incremental increase in expected return is accompanied by an incremental increase in risk. (See Efficient Frontier and accompanying illustration).

Risk Weighting

The assignment of percentage weightings to different forms of investments, reflecting their greater or lesser risks, for the purposes of calculating the capital adequacy standard to be observed by banks eg. the risk weighting for residential lending is currently set at 50%, while for commercial lending it is 100%.

Rule of 72

A convenient technique for either mental or pencil-and-paper estimation of compound interest rates derived from the fact that a 7.2% return per year is the interest rate that will double the value of an investment in ten years. Hence, 'years to double' an investment with a given annual rate of return can be estimated by dividing the rate of return into 72. For example, if an investment's annual return is six percent, its value will double in approximately 12 years (72 divided by six); if an investment's annual return is nine percent, its value will double in approximately eight years (72 divided by nine). Similarly, the rate of return that will double the value of an investment in a given number of years can be estimated by dividing the number of `years to double' into 72. For example, the value of an investment will double in six years if the annual rate of return is approximately 12%.

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Salary Sacrifice

The portion of pre-tax salary of an employee that is given up in exchange for additional contributions by the employer to the employee's superannuation.

Seasonally Adjusted

Referring to figures or statistics which are modified to take account of seasonal factors. Employment statistics, for example, are seasonally adjusted in the first quarter of a calendar year to take account of the influx of school leavers into the workforce.

Secret Commission

A profit or benefit received by an agent, from a third party, where the agent is dealing on behalf of a principal, without the knowledge or authorisation of the principal. The receipt of a secret commission is prohibited by law.

Sector

A group of securities that share common characteristics (eg. resources sector, textiles sector, etc).

Seller's Market

A condition of the market in which there is a scarcity of goods available, and hence, sellers can obtain better conditions for sale or higher prices. (Opposite of Buyer’s Market).

Share

The ownership of part of a company; a contract between the issuing company and the owner of the share which gives the latter an interest in the management of the corporation, the right to participate in profits and, if the company is dissolved, a claim upon assets remaining when all debts have been paid. (See also Equity).

Shareholder

The owner of one or more issued shares of a company who is normally entitled to a proportionate share of the issuing company's undivided assets; dividends when declared by the directors; and the right of proportionate voting power.

Share Certificate

A piece of paper representing legal evidence of ownership of a stipulated number of shares in a company. Also known as Scrip.

Soft Dollars

Payment for research-related services by commissions generated from trading rather than fees.

Speculator

One who is willing to assume a relatively large and generally undiversified risk in the hope of extraordinary gain. Speculators do, in fact, help give depth to securities markets. (See also Investor).

Standard Variable Rate

The rate which lenders apply to their 'premium’ home loan product. Carries features such as a redraw facility, portability, salary account and mortgage offset.

Statement of Advice (SoA)

A Statement of Advice must be provided when personal advice is given to retail clients. It must state the advice that is given and be provided as soon as possible. This must be done before any service in relation to the advice is provided. There are some exceptions to this, for example concerning telephone advice where the client agrees.

Statutory Authority

A public (or semi-government) authority established by legislation, and having the power to make legally enforceable decisions and regulations. Examples includes bodies responsible for electricity generation, gas, water supply, etc.

Stock

A generic term for equities (shares) and, less frequently, bonds. (See also Security).

Time Horizon

The period of time over which an investment objective is to be realised. Time horizon is a critical factor for all investors in determining the types of investments they should make or, at least, the amount of risk they are prepared to carry. The investments made to provide for future retirement income, for instance, would almost always be different from those for short-term purposes.

Trend

A persistent and pervasive direction, upwards or downwards, of commodities, prices, earnings, etc. over a period of time.

Trough

A charting term, also known as a bottom (eg. in charting prices, a trough is the point where the price bottoms before the pressure to buy pushes it back up). (See also Peak).

Trust Deed

An agreement spelling out the methods of receipt, investment and disbursement of funds under a superannuation plan, unit trust, charitable trust, etc. A superannuation trust deed will typically contain provisions for: investment powers of trustees, irrevocability and non-diversion of trust assets, payment of legal, trustee and other fees, liability of trustees, periodic reports by the trustees, records and accounts to be maintained, conditions for removal, resignation, or replacement of trustees, benefit payments under the plan, and the rights and duties of the trustees in case of amendment or termination of the plan.

Trustee

• A person or company that has legal responsibility for financial aspects (receipts, disbursements and investment) of funds;
• A trust company which acts in a capacity of trust as a fiduciary and to whom assets have been conveyed for the benefit of another party. The Trustee in this case oversees the behaviour of the manager in relation to the operation of a unit trust.

Trustee Companies Association of Australia (TCA)

An industry association representing private state and public trustees since 1945. The main aim of the association is to represent the views of the industry to State and Federal government and regulators, mainly regarding legislation, and provide education to the industry and associated professions.

Trustee Director

A director of a corporate trustee.

Trustee Investment Status

A status conferred on selected investments by State Government Trustee legislation. Rules or trust deeds governing certain types of funds might require a portion of investments to be made in authorised trustee investments.

Trust Fund

A fund whose assets are managed by a trustee or a board of trustees for the benefit of another party or parties. Restrictions as to the type of investments in which the trustee may invest the assets of the trust fund are usually found in the trust deed and in applicable legislation.

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Underlying Inflation

A calculated measure that takes the headline inflation rate and excludes certain volatile items or series that are affected by factors other than general economic conditions (e.g. government taxes, or the effect of weather on fruit and vegetable prices). The resulting rate is based on only those items directly related to the economy.

Variable Rate

The rate applied to Honeymoon (Introductory Loans) which is variable and usually set at a discount below the Standard Variable Rate.

Volatility

The extent of fluctuation, or variability, in an underlying instrument such as share prices, exchange rates, interest rates, over an established period of time. The higher the volatility, the less certain an investor is of return, and hence volatility is one measure of risk.

Wholesale Investment Products

Investment funds that are structured and tailored for professional investors (including most superannuation funds, institutions and corporate investors) to invest in.

Yield Curve

A visual representation of the term structure of interest rates. It shows the relationship between bond yields and maturity lengths. A normal or positive yield curve signifies higher interest rates for long-term investment, while a negative or downward curve indicates higher short-term rates.

Yield to Maturity

The yield provided by a bond which is held to its maturity date, taking account of both interest payments and capital gains or losses. Your equity

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