Practice Test Geeks(NAB) National Australia Bank Practice Test
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Investment Basics Flashcards

7 cards from real NAB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Investment Basics flashcards as text

  1. What does 'total return' on an investment include?

    Answer: Both capital gains and income (dividends or interest) received over the investment period

    Total return combines both capital gains (or losses) and income received, giving a complete picture of investment performance.

  2. What is 'superannuation' in the context of Australian investing?

    Answer: A compulsory retirement savings system where employers contribute a percentage of employees' wages

    Superannuation is Australia's mandatory retirement savings scheme, where employers contribute a percentage of wages into a fund that grows tax-advantaged until retirement.

  3. What is an 'investment horizon'?

    Answer: The length of time an investor plans to hold an investment before needing the funds

    An investment horizon is the planned time period over which you intend to hold an investment, which influences the level of risk you can appropriately take on.

  4. What is a 'management expense ratio' (MER) in a managed fund?

    Answer: The annual fee expressed as a percentage of the fund's assets, charged to cover management costs

    The MER is the annual cost of running a managed fund, expressed as a percentage of total assets, and is deducted from fund returns.

  5. What does 'negative gearing' mean in Australian investing?

    Answer: When the costs of holding an investment (including loan interest) exceed the income it generates

    Negative gearing occurs when borrowing costs and expenses exceed the investment's income, creating a loss that may be offset against other taxable income.

  6. What is 'capital preservation' as an investment objective?

    Answer: Protecting the original amount invested from loss, prioritizing safety over high returns

    Capital preservation focuses on protecting the principal investment from loss, typically by holding lower-risk, defensive assets.

  7. Which factor most directly determines an investor's appropriate level of investment risk?

    Answer: The investor's risk tolerance, time horizon, and financial goals

    Appropriate risk level is determined by the individual's personal risk tolerance, how long they can invest, and what they need the money to achieve.