Topic 6 Preload Applications of Finance.pptx

Topic 6 Preload Applications of Finance.pptx -...

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business.monash.edu Pre-load: Applications of Finance Please join the active LC session upon entering class. BFC1001 1
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business.monash.edu Key Topic Aspects being introduced … 1. Home Mortgages 2. Managed Funds 3. Superannuation 2
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business.monash.edu Learning Objectives 3 1. To appreciate how the finance concepts and math we are learning are applied in the real world through examples of financial products commonly used by the general public. 2. Introducing Home Mortgages 3. Introducing Managed Funds 4. Introducing Superannuation
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business.monash.edu Individuals in the retail market typically access the debt market by borrowing money and taking out a loan. A loan allows an individual to overcome equity constraints and bring forward future consumption to the present at a cost. There are many types of retail lending including credit cards, personal loans, lines of credit and mortgage finance. Financial intermediaries such as banks and credit unions are the main providers of such loans. To the lender, a loan is an asset. To the borrower, a loan is a liability. The interest charged on retail loans is influenced by the availability and cost of funds , what the loan is used for, the credit worthiness of the borrower and collateral (if any) held against the loan. In Topic 7, financial intermediaries and how they do business is formally introduced. The most common and largest type of loan taken out by the general public is the____________. 4 Loans (Pre-load 6 LC Q1)
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business.monash.edu Interest-only loans Each loan repayment is interest only. The entire loan principal is due upon loan maturity.
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