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Investment (Equities (Share Market Australian Securities Exchange (ASX)…
Investment
Equities
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Initial Public offering (IPO) When an
Australian company raises capital in Australia from the public like Telstra Qantas etc
Return on Shares 1) Dividend paid 2)Share Price. Franking Dividend: to avoid double taxation, a tax credit in company profits i.e.imputation or franking credit. 45 days holding of shares apply to be eligible for franking credit for individual ceiling $5000 not apply to below that or on managed funds or super funds
Share Price: Total no. of shares issued in the market is vital factor multiplied by current share value. Bid (willing to pay) /Ask(willing to sell) mechanism. the differencetext is spread.Market depth is demand & supply of shares.
Cash
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Cash investments include term deposits, money market securities and cash management accounts/trusts
lowest risk of all asset classes, 90 days treasury note interest rate is used as yardstick but inflation which lowers the cash value is real risk factor.
The difference between the interest rate offered to a depositor and the interest rate offered to a borrower is called the interest rate “spread, the banks profit.
Fixed Interest
Fixed interest investments as Government,banks or big company bonds.
Initially borrowers raise their capital they require in the ‘primary’ fixed interest market from investors.They trade
these securities via the ‘secondary’ market.The fixed interest market is also called the debt securities or bond market.
Three primary influences on bond pricing on the open market are supply and demand, age-to-maturity and credit ratings.
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Investment Decision
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Tactical Asset Allocation is fine tuning of strategic allocation in terms of market situation and investor needs.
Strategic Asset Allocation
security/risk, Flexibility,Correlation with other asset classes, long term returns, ability to beat inflation, tax effectiveness, Time horizon (say 40% in fixed 60% in growth shares)
The time value of money (TVM) is the concept that money available at the present time is worth more than the identical sum in the future due to its potential earning capacity(interest)
The formula is FV = PV (1 + r)^n. The present value of a dollar is what a dollar earned in the future is worth in today's money, where r is the interest rate the money earns, and n is the number of years until it's received. The formula is PV = FV / (1 +r)^n. An annuity is a stream of equal payments.