Question One (a) Definitions Term Deposits: Similar to a Guaranteed Investment Certificate (GIC), term deposits pay a slightly lower interest rate, as they may be redeemed at any time. Credit Union: a cooperative group that makes loans to its members at low rates of interest. Also called cooperative credit union. Building Society: A financial institution owned by its members (further than by share holders) which pays interest on deposits and lends money on the security of property to enable members to buy their own homes. The distinction between building societies and banks (which historically offered a much wider range of financial services but often at a higher cost) is now much reduced and the main difference is often the question of ownership. Debenture: An unsecured bond backed solely by the general credit of a company.
Government Bonds and Semi Government bonds: By investing in government and semi government bonds, you are lending money to the Australian or state government. In return you receive a fixed rate of interest until a specific date when the bonds mature. Then you receive the face value of the bonds back. Government Bonds and Semi Government bonds: By investing in government and semi government bonds, you are lending money to the Australian or state government. In return you receive a fixed rate of interest until a specific date when the bonds mature. Then you receive the face value of the bonds back.
Building Society: A financial institution owned by its members (further than by share holders) which pays interest on deposits and lends money on the security of property to enable members to buy their own homes. The distinction between building societies and banks (which historically offered a much wider range of financial services but often at a higher cost) is now much reduced and the main difference is often the question of ownership.