Page 80 - CAPE Financial Services Syllabus Macmillan_Neat

WORDS/TERMS DEFINITIONS/MEANINGS

Double Tax Agreement The agreement that an entity or individual should not pay two separate
taxes on the same investment for the same purpose and during the same
time period. This occurs because the income from the investment is
subject to two different tax authorities.

Drive-by (Attack vectors/medium available to cyber criminals). Opportunistic
attacks against specific weaknesses within a system.

Due Diligence (Customer, Customer due diligence (CDD) requirement that banks obtain
enhanced) information to verify the customer’s identity and source of funds.
Applying a risk-based approach to customer due diligence (CDD) will
identify situations which can present a higher risk of money laundering
or terrorist financing (EDD).

Economic Conditions These can be considered as the economic characteristics that describe
the state of an economy which can either be contractionary or
expansionary. There are indicators that are used to define the state of
the economy or economic conditions, examples include unemployment
rate, GDP growth rates, and inflation rates.

Efficiency Deals with the extent to which resources are utilised optimally.

Efficient Frontier The efficient frontier is the set of efficient portfolios out of the full set of
potential portfolios. On a graph, the efficient frontier constitutes the
boundary line of the set of potential portfolios.

Efficient Market An efficient market is a well-functioning financial market in which
prices reflect all relevant information. If a financial market is efficient,
then the best estimate of the true value of a security is given by its
current market price.

Efficient Market The efficient market theory implies the following: Resources are
Hypothesis (EMH) effectively allocated in the market, technical analysis and fundamental
analysis are worthless and portfolio selection is worthwhile, but market
timing is not.

Equity Represents funds contributed by the owners, plus retained earnings or
minus the accumulated losses.

Financial Action Task Sets standards and promote effective implementation of legal,
Force (FATF) regulatory and operational measures for combating money laundering,
terrorist financing and other related threats to the integrity of the
international financial system. The FATF is therefore a “policy-making
body” which works to generate the necessary political will to bring about
national legislative and regulatory reforms in these areas.

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