Page 84 - CAPE Financial Services Syllabus Macmillan_Neat

WORDS/TERMS DEFINITIONS/MEANINGS
Liquidity Intermediation
The process of converting illiquid or less liquid assets into cash or near
Markowitz Portfolio cash assets.
Theory
Theory that establishes how risk-averse investors can construct a
MITM portfolio (or portfolios) to maximise expected return given a particular
degree of market risk.
Money Laundering
(strategy/methodology) ‘Man in the middle attack’ where a middleman
Money Creation impersonates each endpoint and is thus able to manipulate both victims.
(Money Expansion)
Net Settlement Payment Creating a fictitious origin or source of funds to conceal the illegal
sourcing of funds.
Nominal Interest Rate
This is the practice of depository institutions to expand their monetary
Notes (currency) base by converting deposits into loans.
Notes (financial
statements) A payment settlement system between banks where a large number of
Organization for transactions are accumulated and offset against each other, with only
Economic Co-operation the net differential being transferred between banks.
and Development (OECD)
OECD Model Tax This is the quoted rate on loan and deposit agreements which is different
Convention from real interest. This reflects only the dollar amount promised as
payments. It does not reflect the purchasing power of those payments.
Offshore Banking
The physical cash used in financial transactions.
Onshore Banking
This refers to additional information provided in a company’s financial
Ordinarily Resident statements. For example, income statements and balance sheets.

International organisation helping governments tackle the economic,
social and governance challenges of a globalised economy.

It is an agreement which serves as a guideline to bilateral and or
transnational co-operations for involving double taxation issues, to aid
in the negotiation of bilateral treaties.

This is where the depositor is located outside of the country that the
bank is domiciled. It provides various legal and financial advantages for
the depositors.

This is where the depositor and the bank are located in the same
country.

Established if there is a regular habitual mode of life in a particular place,
the continuity of which has persisted apart from temporary or
occasional absences. The only provisos are that the residence must be
voluntary and adopted for “a settled purpose". (UK Government)

CXC A38/U2/16 79