Glossary of Terms
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A coupon that is paid once a year.
ASX
Australian Stock Exchange
A basis point is one hundredth of one percent, that is 0.01%.
Bond
A tradeable debt security usually issued by a government or semi-government body to raise money. Holders of the bond have lent money for which they receive a fixed rate of interest over a set period of time. (ie a bond holder is a creditor of the issuer and not a shareholder) The bond is repaid with interest on the predetermined maturity date.
A coupon represents an interest payment paid at regular intervals by the issuer to investors in interest rate securities. The coupon rate is the interest rate paid to investors during the life of the bond and is set when the issuer first sells the securities into the market. The coupons vary according to the type of interest rate security. A fixed rate bond has a coupon that is fixed for the life of the bond.
Coupon Date
The date on which the coupon is paid to an investor of a bond.
A prospectus that is distributed in electronic rather than paper form. The term electronic prospectus covers prospectuses displayed on the Internet.
Ex Interest
A bond which when traded does not carry the entitlement for the buyer to receive the next coupon payment. The seller will receive this payment. Ex means without.
The amount the issuer of a security pays the investor at maturity. Face value is not the current market value of a security.
Fixed Deposit
The same as a term deposit. Money may be placed with a bank, merchant bank, building society or credit union for a fixed term at a fixed rate of interest, which will remain unchanged during the period of the deposit. Depositors may have to accept an interest rate penalty if they wish to get their money out early.
Fixed Interest
Interest paid on investments such as bonds and debentures, paid at a predetermined and unchanging rate for a specified period of time.
Goods and Services Tax
A type of security where ownership details are recorded in a central registry, with the owner holding a certificate which is not itself transferable. (To transfer the security a transfer and acceptance form needs to be completed.)
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.
Issuer
The entity, which issues a fixed interest security, is referred to as the issuer or borrower. (NT Treasury Corporation for Territory Bonds.)
The date on which the face value of a security is due to be repaid.
A coupon that is paid four times a year.
Reserve Bank of Australia
Registry
An entity employed by an issuer whose usual function is to maintain the register of holders and process transfers. (Computershare Investor Services is the registry for Territory Bonds.)
Any market in which existing securities are traded as distinct from the primary market, in which securities are first issued.
Securities
The different type of investments offered by corporations and government authorities. Shares, debentures and bonds are examples of securities.
Semi-annual Coupon
A coupon that is paid twice a year.
Settlement Date
The date when payment occurs for settling a purchase or sale.
Money invested for a fixed period of time at a predetermined rate of interest.
TFN
Tax File Number
The return on an investment expressed as a percentage. Alternatively, the profit or income that an investment or property will return; the money derived from any business venture, usually expressed as an annual percentage of the initial investment.