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Understanding financial Jargon K - O

 

Understanding the lingo can be overwhelming, here are some basic terminologies to help you get an edge on your friends, family and colleagues.

 

Listed Asset
A company that is publicly owned and listed on a recognised exchange.

 

Listed debt
Debt traded on an active exchange. Listed debt can include corporate bonds and hybrids.

 

Liquidity
The ease with which any investment can be converted into cash.

  

Listed property
Constitutes shares in property companies or units in property trusts listed on the Australian Stock Exchange. Examples are Centro Properties Limited and the Westfield Trust.

 

Long term investment
An investment which generally matures in more than five years.

 

Managed fund
Arrangement which usually involves the pooling of the contributions of a plan in a particular fund. This is managed by an external manager and management charges, insurance premiums and benefits are paid. Income earned is credited to the fund.

 

Master trust
A superannuation vehicle which enables a number of companies or individuals to combine their superannuation business under a common trust deed.

 

Medium term investment
An investment which generally matures between two and five years.

 

 

Net Asset Value (NAV)
The value of a fund’s holdings, which may be calculated using a variety of valuation rules.

 

 

Net Present Value (NPV)
A project’s net contribution to wealth. It is the present value minus the initial investment. It computes the expected value of one or more future cash flows and discounts them at a rate that reflects the cost of capital.

 

Nominal Interest Rate
The interest rate expressed in money terms.

 

Non complying fund
Type of superannuation which does not comply with the old section 23F of the ITAA and/or the SIS Act.

 

 

Option
A type of derivative. It is a contract giving the holder the right but not the obligation to buy or sell an underlying asset at a specified price during a given period of time.

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