Page 87 - CAPE Financial Services Syllabus Macmillan_Neat

WORDS/TERMS DEFINITIONS/MEANINGS

Social engineering Exploiting the weakness of the individual by making them click malicious
links, or by physically gaining access to a computer through deception.
Pharming and phishing are examples of social engineering.

Solvency Refers to an enterprise’s capacity to meet its long-term financial
commitments. In contrast, liquidity refers to an enterpriser’s ability to
pay short-term obligations.

Special Purposes Vehicle This is also referred to as a bankruptcy remote entity whose operations
(SPV) are limited to the acquisition and financing of specific assets. The Special
Purposes Vehicle is usually a subsidiary company with an asset or liability
structure and legal status that makes its obligations secure even if the
parent company goes bankrupt.

Spendthrift Protection This is an arrangement whereby one person sets aside property for the
benefit of another, in which, either because of the direction of a settlor
(one who creates a trust), or because of statute, the beneficiary is unable
to transfer his or her right to future payments of income or capital, and
his or her creditors are unable to subject the beneficiary’s interest to the
payment of his or her debts.

Spread options A type of investment option that derives its value from the difference
between the prices of two or more assets.

Stand-Alone Risk (Individual risky asset). A stand-alone risk (associated with a single
asset). It is usually measured using statistical tools such as standard
deviation.

Standard Deviation Square of the variance. Measures how far each value in the data set is
away from the mean. Standard deviation retains the unit of measure of
the data set.

Swaps (Total return, This is a financial transaction that involves the exchange of one
credit default) sequence of cash flows for another.

Tax Avoidance The legal use of the tax regime in a particular territory to reduce tax
obligations.

Tax Evasion The illegal use of the tax regime in a particular territory to reduce tax
obligations.

Tax Planning An exercise undertaken to minimise tax liability through the best use of
all available allowances, deductions, exclusions, and exemptions to
reduce income and or capital gains.

Tax Regulation This deals with the imposition and collection of all taxes within a
particular jurisdiction.

CXC A38/U2/16 82