Topic 1
Financial markets
Introduction
In our fast-paced society, we are constantly confronted with choices relating to income and consumption. These choices can relate to basic, daily activities such as: ‘Should I buy a new or second-hand car?’
‘Which job should I apply for?’
‘Should I invest in shares?’
‘Do I want to own my own home?’ and
‘Do I want to be wealthy?’
The answers to these questions and others relating to income and consumption will have a significant impact on a person’s life and their standard of living.
This topic examines the notion of investment decisions by introducing the investment process and expands on performance measures. For many of you this will be familiar territory and should be regarded essentially as important revision as it provides background for the remaining topics in this unit. The topic further expands on the structure of the Australian financial market by reinforcing students’ knowledge on the nature of financial markets.
Objectives
At the completion of this topic you should be able to: understand the nature of an investment and describe the key steps in the investment process understand the time value of money concept understand the concept of return and the trade off between risk and return. understand the role and importance of normal distribution describe the structure of Australian financial markets explain the relative importance of Australian financial markets within a global context explain the linkages between the various Australian financial markets and the linkages between Australian and international