Page 77 - CAPE Financial Services Syllabus Macmillan_Neat

Appendix II

 GLOSSARY OF FINANCIAL SERVICES TERMS

WORDS/TERMS DEFINITIONS/MEANINGS

Accounting Record Key sources of data to verify financial statements. For example, bank
Arbitrage Pricing Theory statements, invoices, and bank vouchers.

Assets The APT is an equilibrium model developed by Ross. The primary
Asset Protection assumption of the APT is that security returns are generated by a linear
factor model. The APT is based on a no-arbitrage condition. That is, an
Asset Transformation investor should not be able to build a zero-risk, zero-investment
Asymmetric Information portfolio that has positive returns.
Audit
Balance Sheet An asset is an item of economic value that is expected to yield a benefit
Bank for International to the owning entity in future periods.
Settlements
Banking Secrecy This is the type of planning intended to protect one’s assets from
creditors’ claims. Individuals and business entities use these asset
Behavioural Finance protection techniques to limit creditors’ access to certain valuable assets
Beta – (value) while operating within the boundaries or debtor-creditor law.

This is the process of creating a new asset from liabilities with different
characteristics by converting small denomination, immediately available
and relatively risk free bank deposits into loans.

This is where one person is less informed than another in the market.

This is an examination and verification of a company’s financial and
accounting records and supporting documents by a professional such as
a certified public accountant.

This is a financial statement that summarises a company’s assets,
liabilities and shareholders’ equity at a specific point in time.

The mission of the BIS is to serve central banks in their pursuit of
monetary and financial stability, to foster international cooperation in
those areas and to act as a bank for central banks.

Legislation that prevents banks from sharing personal and account
information about their customers. This rule does not apply to customer
credit information. Bank secrecy may be over-rule if money laundering
is suspected.

A field in finance that uses behavioural and cognitive psychology to
explain market participants’ behaviour.

A measure of systematic risk between the particular security vis-a-vis
the market portfolio. It measures a stock's volatility or the degree to
which its price fluctuates in relation to the overall market.

CXC A38/U2/16 72