Top ten shares questions

1. Does the stock market deal with anything beside shares?
   Yes. There are also so-called secondary products, called so because they still derive from shares - these are called "derivatives". These are complex products (such as options and warrants) that should be discussed with a broker.
   
   
2. Why are shares different to other growth investments like property?
   Shares are far more portable, and unlike property can be easily divided so you can sell only a portion of your holding.
   
   
3. I suspect my broker has a business relationship with the company he recommended I buy stock in. Is this legal?
   To some extent this depends on the nature of the relationship, but you should ask him directly whether he does have a relationship with the company, and if this represents a conflict of interest. If you are in any doubt contact the Australian Security and Investment Commission office in your State.
   
   
4. Why should I use a full service broker when I can use a discount broker so much cheaper?
   This is really a question you should put to a full service broker. You should ask what you are getting for your dollar, and whether there will be investment advice provided by the full service broker. You might also have more need for a full service broker when you are new to the sock market, or experience may allow you to recognise the situations when a discount broker will suffice. It is always a good idea to get in touch with the Australian Stock Exchange in your capital city if you have any queries - they maintain an information service.
   
   
5. Do the brokers themselves handle each transaction?
   Not necessarily. A person with the requisite experience might carry it out. Of course, you can always ask this question when you speak to the broker.
   
   
6. What happens if there are more applications for shares in the prospectus than are issued in the IPO?
   Generally you will then not receive all the shares you have asked for. Instead you may receive a proportion of the application.
   
   
7. What happens if I refuse to give my tax file number when I purchase shares?
   There is a penalty that attaches to the dividends you earn. You will automatically be taxed at the highest rate.
   
   
8. I sent a cheque for a float, but then I did not receive any shares. The company says it will be couple of months before I get my refund. Is that fair? Shouldn't I get interest on the money?
   Check what the prospectus says, but you may not receive any interest. Make sure you always check the detail of the prospectus before you write the cheque.
   
   
9. Can I force the company to issue the shares I applied for?
   Under the law you cannot do this as long as the company directors have acted according to the prospectus.
   
   
10. I have been offered greater returns on my shareholdings by a financial adviser. Should I take this offer?
    Remember, in general the rule is that higher returns mean higher risk. This might be a fair strategy if you have a lot of money to spare, but if you are going to be worried all the time be careful! Best advice would be to speak to a reputable full service broker, seek a second opinion from a financial planner or contact ASIC.?