Financial Concepts and Investment Understanding

The video revisits financial maths topics, focusing on credit and borrowing, and compares them to investing. It explains the transfer of funds between parties, the purpose behind these transactions, and the returns involved, such as dividends and interest.

What is the first step in financial mathematics according to FM1?

• Paying taxes

• Earning income

• Creating a budget

• Investing in shares

What is FM4 primarily concerned with?

• Taxation

• Credit and borrowing

• Income generation

• Budgeting

How is credit and borrowing related to investing?

• They are unrelated concepts

• Credit and borrowing is a form of taxation

• They both involve permanent transfer of funds

• Credit and borrowing is the opposite of investing

In the context of investing, who typically receives the funds?

• The government

• The company

• The bank

• The investor

Why might a company issue shares to the public?

• To avoid borrowing from banks

• To increase immediate revenue

• To reduce taxes

• To gain temporary access to funds

What is a common reason for individuals to borrow money?

• To invest in stocks

• To avoid paying taxes

• To pay for daily expenses

• To purchase a car or house

What is the term used for the loan taken out for university tuition fees in Australia?

• Interest

• Dividend

• HECS

• Mortgage

What do companies pay to investors as a return on their investment?

• Interest

• Dividends

• Principal

• Fees

What is the term for the extra amount paid back to the bank when borrowing money?

• Fee

• Interest

• Principal

• Dividend

How are dividends and interest similar?

• Both are paid by the government

• Both are returns on investment

• Both are unrelated financial terms

• Both are forms of taxes