Term Deposits - Glossary of Terms

20 August 2012

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Important Notes

These are a general explanation of the meaning of terms used in relation to (product name).

Policy wording may use different terms and you should read the terms and conditions of the relevant policy to understand the inclusions and exclusions of that policy. You cannot rely on these terms to the part of any policy you may purchase.

Refer to the product disclosure statement and Canstar?s FSG.

Cooling off period – defines the amount of days available for the investor to change their investment term or options on the term deposit. This allows for you to withdraw funds or cancel obligations. Will be specified in the contract.
Coupon payment – a portion of a bond entitling the holder to a receive a payment of interest. For example a 10% coupon paid semiannually would yield two 5% interest payments.
Debenture – A medium- to long-term investment issued by a company. You are lending money to the company. In return you will receive a regular and fixed interest amount for the term of the investment. The invested funds (principal) are repaid at the end of the term (maturity).
Interest Paid – the amount of simple interest paid on the principle amount invested in the term deposit. For example a term deposit paying 6% pa paying interest at end of term over a 6 month period would pay 3% of the sum invested.
Maximum Term – the maximum amount of time available for a certain tier of interest on a term deposit
Maturity – the time at which the term deposit will expire and stop accumulating interest, also referred to as end of term.
Minimum Term – the minimum amount of time available for a certain tier of interest on a term deposit.
Term – the length of time a loan or investment will run for
Term deposits – An account with a financial institution where money is deposited for a set period of time. The interest rate is usually fixed for the term of the deposit and is generally higher than a transaction account but not always higher than some other at-call high interest savings accounts. Also known as a fixed deposit.
Yield – the rate of return earned on an investment

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