Page 78 - CAPE Financial Services Syllabus Macmillan_Neat

WORDS/TERMS DEFINITIONS/MEANINGS

Bonds (Coupon) An investment bond on which is interest is given to the bondholder in
Bonds (Discount) the form of coupon payments Bonds sold at par, discount and premium.
Capital
Capital Adequacy An investment bond that is sold below face value, no interest is paid to
the bondholder. At maturity the face value of the bond is paid to the
Capital Asset Pricing bondholder.
Model (CAPM)
This represents the residual value of a company or the total wealth of
Capital Gains Tax the owner.
Capital Market
Capital Market Line (CML) The legal minimum amount of reserves of capital that a bank must hold.
A measure of the adequacy of an entity's capital resources in relation to
Caribbean Financial its current liabilities and also in relation to the risks associated with its
Action Task Force (FATF) assets. An appropriate level of capital adequacy ensures that the entity
Cash Flow Statement has sufficient capital to support its activities and that its net worth is
Charities sufficient to absorb adverse changes in the value of its assets without
Comprehensive Income becoming insolvent.

A model that describes the relationship between risk and expected
return and is used in portfolio theory. Graphically it is a line used in the
capital asset pricing model to illustrate the rates of return for efficient
portfolios depending on the risk-free rate of return and the level of risk
(standard deviation) for a particular portfolio.

Tax levied on the disposal of an investment or asset.

It is a market where long-term funding may be obtained. For example,
stock markets.

(A value that can be calculated). It specifies the efficient set of portfolios
an investor can attain by combining a risk-free asset and the risky market
portfolio M. The CML states that the expected return on any efficient
portfolio is equal to the riskless rate plus a risk premium, and thus
describes a linear relationship between expected return and risk.

The Caribbean Financial Action Task Force (CFATF) is an organisation of
states and territories of the Caribbean basin which have agreed to
implement common counter-measures against money laundering.

This typically reports a company’s cash sources and uses for the period
into three categories: cash flow from operating activities, cash flow from
investing activities, cash flow from financing activities.

These are non-profit organisations which provide various social goods
and services.

This is a financial report detailing the change in a company’s net assets
during a specific period of time. A statement of comprehensive income
differs from a typical income statement which details profits and losses
but will make changes in net assets due to transfer of equity holdings,
change of ownership or other factors.

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