Glossary

Naked Option
An option held on its own; ie. not used to hedge a holding in the underlying asset or another option.

National Accounts
Figures published annually in the Commonwealth Budget summarising income and expenditure for the economy as a whole and for various industry sectors. National account figures form part of the basis for calculating Gross Domestic Product.

National Companies and Securities Commission (NCSC)
The former national regulatory authority for Australian companies and the securities and futures industries. Replaced by the Australian Securities Commission following commencement of the Corporations Law in 1991.

National Mortgage Market Corporation
A private organisation which issues mortgage-backed certificates; established in 1984 and based in Melbourne. (See also AUSSIE MAC, Securitisation).

National Savings
The total level of savings, defined as the income remaining after consumption, of a country's households.

NBFI
Abbreviation for Non-Bank Financial Institution.

NBR
Abbreviation for Net Borrowing Requirement.

NCSC
Abbreviation for National Companies and Securities Commission.

Negative Gearing
The purchase of an investment using borrowed funds, where the interest on the borrowing exceeds the income derived from the investment. For tax purposes, this negative net income can be offset against income gained from other sources. Negative gearing is most often associated with purchases of investment real estate, but can also apply in the case of shares or managed investments.

Negligence
Failure to exercise a reasonable degree of care in relation to others, exposing them to risk of harm or injury. It has set criteria in law.

Negotiable Instrument
A piece of paper representing ownership of a financial asset or debt, and capable of being traded in the money market (eg. Bill of Exchange, Promissory Note).

Net
The figure remaining after all necessary deductions have been taken away. Opposite of Gross.

Net Asset Backing
Total shareholders' funds in a company (ie. total assets less total liabilities) divided by the number of shares on issue. (See also Asset Backing).

Net Asset Value
Total assets of a company less total liabilities. A more refined measure is Net Tangible Assets, which do not include intangible items like goodwill.

Net Borrowing Requirement (NBR)
The total amount to be borrowed by the Government through the issuance of Bills of Exchange and Bonds to meet Government expenditure for a specific period.

Net Present Value (NPV)
The current value of a stream of income discounted by a factor (usually inflation) over the period of an investment.

Net Profit
The profit earned by a company less expenses such as tax and interest on borrowings. (See also Earnings Before Interest and

Net Realisable Value
The current market price of an asset after deducting the costs of selling it.

Net Tangible Assets (NTA)
See Net Asset Value.

Netting
The practice of subtracting the amount owed by one party from the amount owed to that party and agreeing to transfer only the resulting difference.

Netting by Novation
The substitution of new contractual obligations, equal to the net obligations, for the existing ones.

New Issue
Any type of security issued to raise additional money. Offerings are made to existing shareholders, through rights issues or entitlements, and/or to non-shareholders. Proceeds may be used for retiring debt, for acquisitions or for working

Nikkei Dow Index
The popularly quoted Japanese Share Price Index, covering the top 225 shares listed on the Tokyo Stock Exchange. The newer, wider market measure is the Topix.

Nominal Return
The rate of return in simple monetary terms, ie. unadjusted for any change in inflation. The nominal return is contrasted with the real return, which is adjusted for changes in inflation. A nominal interest rate of 10% is a real rate of only 6% if inflation at the time of measurement is 4%.

Nominee
An individual or company in whose name a security is registered to be owned, although the real (or beneficial) ownership is actually held by another party. Nominee companies are often used by share investors who for some reason wish their identities to remain undisclosed or who simply require another party to manage (or hold as custodian) their investments.

Non-Bank Financial Institution (NBFI)
A generic term describing any financial institution not covered by Reserve Bank supervision, but more commonly referring to institutions such as Building Societies, Credit Unions and Friendly Societies, all of which are now regulated by the Australian Financial Institutions Commission.

Non-Complying Fund
A superannuation fund which fails to meet the prerequisites for concessional taxation treatment under the SIS Legislation. (See also Complying Fund).

Non Factor Risk
Risk in an investment which is not related to movements in common factors and can therefore be diversified away.

Non-Renouncable Rights
Rights associated with a share that cannot be traded on the market.

Normal Distribution
A statistical measure used to calculate the probability of future returns on an investment. The distribution has a characteristic 'bell' shape illustrating that the probability of returns above the mean is identical to the probability of returns below the mean (See also Standard Deviation).

Novation
The incorporation into existing contracts of subsequent agreements or deals between the same parties, so that at all times only one contract remains outstanding between those parties.

NPV
Abbreviation for Net Present Value.

NTA
Abbreviation for Net Tangible Assets.

Number One Fund
See Statutory Fund.

Number Two Fund
See Statutory Fund.

NZSE30
A New Zealand Share Price Index covering the top thirty shares listed on the New Zealand Stock Exchange.

A, B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, V, W, X, Y, Z

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