E
	Fifth letter of a Nasdaq stock symbol specifying that an issue has not met the reporting date for the company's SEC regulatory filing requirements.
EAFE index
	See: European Australian and Far East index
EASD
	See: European Association of Securities Dealers
EBIAT
	See: Earnings Before Interest after Taxes
EBIT
	See: Earnings Before Interest and Taxes
EBITD
	See: Earnings Before Interest, Taxes and Depreciation
EBITDA
	See: Earnings Before Interest, Taxes, Depreciation, and Amortization
EBT
	See: Earnings Before Taxes
ECU
	See: European Currency Unit
EDI
	See: Electronic Data Interchange
EM
	See: Effective margin
EMS
	See: European Monetary System
EOE
	See: European Options Exchange
EOQ
	See: Economic Order Quantity
EM
	See: Effective Margin
ERM
	See: Exchange Rate Mechanism
ESOP
	See: Employee Stock Ownership Plan
EU
	See: European Union
EUREX
	The European derivatives exchange formed in 1998 by a merger of the Deutsche Terminbörse (DTB) and the Swiss Options and Financial Futures Exchange (SOFFEX).
Each way
	A broker's commission from his or her involvement on both the purchase and the sale side of a security.
Early withdrawal penalty
	Penalty paid by the holder of a fixed-term investment penalizing an investor who withdraws money before the agreed-upon maturity date.
Earn-out
	Refers to an additional payment in a merger or acquisition that is not part of the original acquisition cost, which is based on the acquired company's future earnings relative to a level determined by the merger agreement.
Earned income credit
	A tax credit for taxpayers with children.
Earned surplus
	See: Retained earnings
Earnest money
	Money given to a seller by a buyer to demonstrate the buyer's good faith. If the deal falls through, the deposit is usually forfeited.
Earning asset
	An asset that generates income, e.g., income from rental property.
Earning power
	Earnings before interest and taxes (EBIT) divided by total assets.
Earnings
	Net income for the company during a period.
Earnings before interest after taxes (EBIAT)
	A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest plus cash income taxes. Equivalent to EBIT minus cash taxes.
Earnings before interest and, taxes (EBIT)
	A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest and income taxes.
Earnings before interest, taxes, and depreciation (EBITD)
	A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest and income taxes. Depreciation expenses are not included in the costs.
Earnings before interest, taxes, depreciation, and amortization (EBITDA)
	A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest and income taxes. Depreciation and amortization expenses are not included in the costs.
Earnings before taxes (EBT)
	A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of income taxes.
Earnings momentum
	An increase in the earnings per share growth rate from one reporting period to the next.
Earnings per share (EPS)
	A company's profit divided by its number of outstanding shares. If a company earning $2 million in one year had $2 million shares of stock outstanding, its EPS would be $1 per share. In calculating EPS, the company often uses a weighted average of shares outstanding over the reporting term.
Earnings-price ratio
	See: Earnings yield
Earnings retention ratio
	Plowback rate.
Earnings surprises
	Positive or negative differences from the consensus forecast of earnings by institutions such as First Call or IBES Negative earnings surprises generally have a greater adverse effect on stock prices than a reciprocal positive earnings surprise.
Earnings yield
	The ratio of earnings per share, after allowing for tax and interest payments on fixed interest debt, to the current share price. The inverse of the price-earnings ratio. It is the total twelve months, earnings divided by number of outstanding shares, divided by the recent price, multiplied by 100. The end result is shown in percentage terms. We often look at earnings yield because this avoids the problem of zero earnings in the denominator of the price-earning ratio.
Easy money
	See: Tight money
Eating stock
	When an underwriter can't find buyers for a stock and therefore has to buy them for his own account.
ECN
	See: Emerging company marketplace
Economic assumptions
	General market environment a firm expects to operate in over the life of a financial plan.
Economic defeasance
	See: In-substance defeasance
Economic dependence
	When the costs and/or revenues of one project depend on those of another.
Economic earnings
	The real flow of cash that a firm could pay out forever in the absence of any change in the firm's productive capacity.
Economic exposure
	The extent to which the value of a firm will change because of an exchange rate change.
Economic growth rate
	The annual percentage rate of change in the Gross National Product.
Economic income
	Cash flow plus change in present value.
Economic indicators
	The key statistics of the economy that reveal the direction the economy is heading in; for example, the unemployment rate and the inflation rate.
Economic order quantity (EOQ)
	The order quantity that minimizes total inventory costs.
Economic rents
	Profits in excess of the competitive level.
Economic risk
	In project financing, the risk that the project's output will not be salable at a price that will cover the project's operating and maintenance costs and its debt service requirements.
Economic surplus
	For any entity, the difference between the market value of all its assets and the market value of its liabilities.
Economic union
	An agreement between two or more countries that allows the free movement of capital, labor, and all goods and services, and involves the harmonization and unification of social, fiscal, and monetary policies.
Economics
	The study of the economy. See also: Macroeconomics; microeconomics; Keynesian economics, monetarism, and supply-side economics.
Economies of scale
	The decrease in the marginal cost of production as a firm's extent of operations expands.
Economies of scope
	Scope economies exist whenever the same investment can support multiple profitable activities less expensively in combination than separately.
EDGAR
	The Securities & Exchange Commission uses Electronic Data Gathering and Retrieval to transmit company documents such as 10-Ks, 10-Qs, quarterly reports, and other SEC filings, to investors.
Edge corporations
	Specialized banking institutions, authorized and chartered by the Federal Reserve Board of Goverors in the U.S., that are allowed to engage in transactions of a foreign or international character. They are not subject to restrictions on interstate banking. Foreign banks operating in the U.S. are permitted to organize and own an edge corporation.
Education IRA
	A type of individual retirement account enabling the contribution of up to $500 per year for each child up to the age of 18 by the parents in the family.
Effective annual interest rate
	An annual measure of the time value of money that fully reflects the effects of compounding.
Effective annual yield
	Annualized interest rate on a security computed using compound interest techniques.
Effective call price
	The strike price in a market redemption provision plus the accrued interest to the redemption date.
Effective convexity
	The convexity of a bond calculated using cash flows that change with yields.
Effective date
	In an interest rate swap, the date the swap begins accruing interest.
Effective debt
	The total debt owed by a firm to its creditors.
Effective duration
	The duration calculated using the approximate duration formula for a bond with an embedded option, reflecting the expected change in the cash flow caused by the option. Measures the responsiveness of a bond's price-taking into account that expected cash flows will change as interest rates change due to the embedded option.
Effective margin (EM)
	Used with SAT performance measures, the amount equal to the net earned spread, or margin of income, on assets in excess of financing costs for a given interest rate and prepayment rate scenario.
Effective net worth
	Net worth plus subordinated debt.
Effective rate
	A measure of the time value of money that fully reflects the effects of compounding.
Effective sale
	A sale based on the most recent round-lot price, which determines the price of the next odd lot. The difference created between the last round-lot price and the odd-lot price is referred to as the odd-lot differential.
Effective spread
	The gross underwriting spread adjusted for the impact that a common stock offering's announcement has on the firm's share price.
Effective tax rate
	The net rate a taxpayer pays on income that includes all forms of taxes. It is calculated by dividing the total tax paid by taxable income.
Efficiency
	The degree and speed with which a market accurately incorporates information into prices.
Efficient capital market
	A market in which new information is very quickly reflected accurately in share prices.
Efficient diversification
	The organizing principle of modern portfolio theory, which maintains that any risk-averse investor will search for the highest expected return for any particular level of portfolio risk.
Efficient frontier
	The combinations of securities portfolios that maximize expected return for any level of expected risk, or that minimizes expected risk for any level of expected return. Pioneered by Harry Markowitz.
Efficient Market Hypothesis
	States that all relevant information is fully and immediately reflected in a security's market price, thereby assuming that an investor will obtain an equilibrium rate of return. In other words, an investor should not expect to earn an abnormal return (above the market return) through either technical analysis or fundamental analysis. Three forms of efficient market hypothesis exist: weak form (stock prices reflect all information on past prices), semistrong form (stock prices reflect all publicly available information), and strong form (stock prices reflect all relevant information including insider information).
Efficient portfolio
	A portfolio that provides the greatest expected return for a given level of risk (i.e., standard deviation), or, equivalently, the lowest risk for a given expected return.
Efficient set
	Graph representing a set of portfolios that maximize expected return at each level of portfolio risk.
Eighth[-ed]
	Used in the context of general equities. A specialist or another broker is bidding higher or offering lower than we are, often topping or undercutting us by an eighth.
Either/or facility
	An agreement permitting a bank customer to borrow either domestic dollars from the bank's head office or Eurodollars from one of its foreign branches.
Either-or order
	Used in the context of general equities. See: Alternative order.
Either-way market
	In the interbank Eurodollar deposit market, an either-way market is one in which the bid and offered rates are identical.
Elasticity of demand and supply
	The degree of buyers' responsiveness to price changes. Elasticity is measured as the percent change in quantity divided by the percent change in price. A large value (greater than 1) of elasticity indicates sensitivity of demand to price, e.g., luxury goods. Goods with a small value of elasticity (less than 1) have a demand that is insensitive to price, e.g., food.
Elasticity of an option
	Percentage change in the value of an option given a 1% change in the value of the option's underlying stock.
Elect
	The conversion of a conditional order into a market order.
Electronic data interchange (EDI)
	The direct exchange of information electronically, from one firm's computer to another firm's computer in a structured format.
Electronic depository transfers
	The transfer of funds between bank accounts through the Automated Clearing House (ACH) system.
Elephants
	A term used to refer to large institutional investors.
Eleven bond index
	An index based on the average yield of 11 municipal bonds that mature in 20 years and carry an average AA rating. The eleven bonds used to calculate the index are also found in the 20 bond index, which serves as a benchmark in tracking municipal bond yields.
Eligible bankers' acceptances
	In the BA market, an acceptance may be referred to as eligible because it is acceptable by the Fed as collateral at the discount window and/or because the accepting bank can sell it without incurring a reserve requirement.
Elliott Wave Theory
	Technical market timing strategy that predicts price movements on the basis of historical price wave patterns and their underlying psychological motives. Robert Prechter is a famous Elliott Wave theorist.
Elves
	A term the host uses to refer to guests on the PBS television show, "Wall Street Week", who are technical analysts attempting to predict the direction of stock prices over the next six months.
Embedded option
	An option that is part of the structure of a bond that gives either the bondholder or the issuer the right to take some action against the other party, as opposed to a bare option, which trades separately from any underlying security.
Emergency fund
	A reserve of cash kept available to meet the costs of any unexpected financial emergencies.
Emergency Home Finance Act of 1970
	The federal legislation creating the Federal Home Loan Mortgage Corporation, a partially government-run program initiated to stimulate the development of a secondary mortgage market and expand mortgages available to veterans and other groups.
Emerging Company Marketplace (ECM)
	A service once offered by the American Stock Exchange to help small growth companies fulfill special listing requirements. The service is no longer available.
Emerging markets
	The financial markets of developing economies.
Emerging Markets Free index (EMF)
	A Morgan Stanley Capital International index created to track stock markets in selected emerging markets that are open to foreign investment like Argentina, Chile, Jordan, Malaysia, Mexico, Philippines, and Thailand.
Employee Retirement Income Security Act (ERISA)
	The law that regulates the operation of private pensions and benefit plans.
Employee stock fund
	A firm-sponsored program that enables employees to purchase shares of the firm's common stock on a preferential basis.
Employee stock ownership plan (ESOP)
	A company contributes to a trust fund that buys stock on behalf of employees.
Empty head and pure heart test
	Securities and Exchange Commission rule that allows only the bidder of a tender offer to trade in the stock while possessing inside information.
Encumbered
	A property owned by one party on which a second party reserves the right to make a valid claim, e.g., a bank's holding of a home mortgage encumbers property.
End-of-year convention
	Treating cash flows as if they occur at the end of a year as opposed to the date convention. Under the end-of-year convention, the present is time 0, the end of year 1 occurs one year hence; and so on.
Endogenous variable
	A value determined within the context of a model. Related: Exogenous variable.
Endorse
	Transfering asset ownership by signing the back of the asset's certificate.
Endowment
	Gift of money or property to a specified institution for a specified purpose.
Endowment funds
	Investment funds established for the support of institutions such as colleges, private schools, museums, hospitals, and foundations. The investment income may be used for the operation of the institution and for capital expenditures.
Energy mutual fund
	Mutual fund investing in energy stocks only, e.g., oil and gas companies.
Enhanced indexing
	Also called indexing-plus, an indexing strategy whose objective is to exceed or replicate the total return performance of some predetermined index.
Enhancement
	An innovation that has a positive impact on one or more of a firm's existing products.
Enterprise
	A business firm.
Entrepreneur
	A person starting a new company who takes on the risks associated with starting the enterprise, which may require venture capital to cover start-up costs.
Environmental fund
	A mutual fund that invests strictly in stocks of companies that are environmentally friendly and/or have the goal of environmental betterment. The investors are trying to support and profit from opportunities related to the environmental movement.
EPS
	See: Earnings per share
Equal dollar swap
	Selling common stock/convertibles in one company and reinvesting the proceeds in as many shares of (1) another type of security issued by the company, or (2) another security of the same type but of another company -- as can be bought with the proceeds of the sale. See: Equal shares swap.
Equal shares swap
	Applies mainly to convertible securities. Selling the underlying common and reinvesting the proceeds in as much of the convertible as can be converted into the number of shares of common just sold. See equal dollar swap.
Equalizing dividend
	Special dividends received by investors of a firm for income the investor lost because the firm altered the dividends payment schedule.
Equilibrium market price of risk
	The slope of the capital market line (CML). Since the C.M.L. represents the expected return offered to compensate for a perceived level of risk, each point on the line is a balanced market condition, or equilibrium. The slope of the line determines the additional expected return needed to compensate for a unit change in risk. The equation of the CML is defined by the capital asset pricing model.
Equilibrium price
	The price when the supply of goods matches demand.
Equilibrium rate of interest
	The interest rate that clears the market. Also called the trade-clearing interest rate.
Equipment leasing partnership
	A limited partnership that receives income and tax benefits such as depreciation costs by purchasing equipment and leasing it to other parties.
Equipment trust certificates
	Certificates issued by a trust that is formed to purchase an asset and lease it to a lessee. When the last of the certificates has been repaid, title and ownership of the asset transfers to the lessee.
Equitable owner
	The beneficiary of a property held in a trust.
Equity
	Ownership interest in a firm. Also, the residual dollar value of a futures trading account, assuming its liquidation is at the going trade price. In real estate, dollar difference between what a property could be sold for and debts claimed against it. In a brokerage account, equity equals the value of the account's securities minus any debit balance in a margin account. Equity is also shorthand for stock market investments.
Equity cap
	An agreement in which one party, for an up-front premium, agrees to pay the other at specific time periods if a designated stock market benchmark tops a predetermined level.
Equity claim
	Also called a residual claim; a claim to a share of earnings after debt obligations have been satisfied.
Equity collar
	The simultaneous purchase of an equity floor and sale of an equity cap.
Equity contribution agreement
	An agreement to contribute equity to a project under certain specified conditions.
Equity floor
	An agreement in which one party agrees to pay the other at specific time periods if a specific stock market benchmark falls below a predetermined level.
Equity funding
	An investment consisting of a life insurance policy and a mutual fund. The insurance policy is paid by the collateral value of fund shares, give the investor the advantages of insurance protection with the growth potential of a mutual fund.
Equity kicker
	Stock warrants issued attached to privately placed bonds.
Equity-linked policies
	Related: Variable life
Equity market
	Related: stock market
Equity multiplier
	Total assets divided by total common stockholders' equity; the total assets per dollar of stockholders' equity.
Equity options
	Securities that give the holder the right (but not the obligation) to buy or sell a specified number of shares of stock, at a specified price for a certain (limited) time period. Typically one option equals 100 shares of stock.
Equity REIT
	A Real Estate Investment Trust that assumes ownership status in the property it invests in enabling investors of the REIT to earn dividends on rental income from the property and appreciation in property resale. Antithesis of a Mortgage REIT.
Equity swap
	A swap in which the cash flows exchanged are based on the total return on some stock market index and an interest rate (either a fixed rate or floating rate). Related: Interest rate swap.
Equityholders
	Stockholders; those holding shares of the firm's equity.
Equivalent annual annuity
	The amount per year for some number of years that has a present value equal to a given amount.
Equivalent annual benefit
	The annual annuity with the same value as the net present value of an investment project.
Equivalent annual cash flow
	Annuity with the same net present value as the company's proposed investment.
Equivalent annual cost
	The cost per year of owning an asset over its entire life.
Equivalent bond yield
	Annual yield on a short-term, noninterest-bearing security calculated for comparison to yields quoted on coupon securities.
Equivalent loan
	Given the after-tax stream associated with a lease, the maximum amount of conventional debt that the same period-by-period after-tax debt service stream is capable of supporting.
Equivalent taxable yield
	The yield that must be offered on a taxable bond issue to give the same after-tax yield as a tax-exempt issue.
Erosion
	A negative impact on one or more of a firm's existing assets.
Escalator clause
	Provision in a contract allowing cost increases to be passed on. In an employment contract, for example an escalator clause may call for wage increases in line with inflation.
Escrow
	Property or money held by a third party until the agreed upon obligations of a contract are met.
Escrow receipt
	A document provided by a bank in options trading to guarantee that the underlying security is on deposit and available for potential delivery.
Escrowed to Maturity (ETM)
	Holding of the proceeds from a new bond issue to pay off an existing bond issue at its maturation date.
Essential purpose (or function) bond
	See: Public purpose bond
Estate tax
	A federal or state tax imposed on an individual's assets inherited by heirs.
Ethical fund
	See: Social conscious mutual fund.
Ethics
	Standards of conduct or moral judgment.
Euro
	Originally for a deposit outside one's home country but in the home country currency. This terminology is confusing now since the new European currency unit, also called the Euro, was introduced on January 1, 1999.
Euro CDs
	CDs issued by a U.S. bank branch or foreign bank located outside the U.S. Almost all Euro CDs are issued in London.
Euro lines
	Lines of credit granted by banks (foreign or foreign branches of U.S. banks) for Eurocurrencies.
Euro straight
	A fixed-rate coupon Eurobond.
Eurobank
	A bank that regularly accepts foreign currency-denominated deposits and makes foreign currency loans.
Eurobond
	A bond that is (1) underwritten by an international syndicate, (2) issued simultaneously to investors in a number of countries, and (3) issued outside the jurisdiction of any single country.
Euroclear
	One of two principal clearing systems in the Eurobond market. It began operations in 1968, is located in Brussels, and is managed by Morgan Guaranty Bank. Applies mainly to international equities. European clearing organization that functions much like the DTC
Euro-commercial paper
	Short-term notes with maturities up to 360 days that are issued by companies in international money markets.
Eurocredits
	Intermediate-term loans of Eurocurrencies made by banking syndicates to corporate and government borrowers.
Eurocurrency
	Instrument issued outside your country, but denominated in your currency. A Eurodollar is a Certificate of Deposit in U.S. dollars in some other country (though mainly traded in London). A Euroyen is a CD in yen outside Japan.
Eurocurrency deposit
	A short-term fixed-rate time deposit denominated in a currency other than the local currency (i.e., U.S. dollars deposited in a London bank).
Eurocurrency market
	The money market for borrowing and lending currencies that are held in the form of deposits in banks located outside the countries where the currencies are issued as legal tender.
Eurodollar
	Refers to a certificate of deposit in U.S. dollars in a bank that is not located in the U.S. Most of the Eurodollar deposits are in London banks, but Eurodeposits may be anywhere other than the U.S. Similarly, a Euroyen or Euro DM deposit represents a CD in yen or DM outside Japan and Germany, respectively.
Eurodollar bonds
	Eurobonds denominated in U.S.dollars.
Eurodollar certificate of deposit
	A certificate of deposit paying interest and principal in dollars, but issued by a bank outside the United States, usually in Europe.
Euroequity issues
	Securities sold in the Euromarket. That is, securities initially sold to investors simultaneously in several national markets by an international syndicate. Related: External market.
Euro-medium term note (Euro-MTN)
	A nonunderwritten Euronote issued directly to the market. Euro-MTNs are offered continuously rather than all at once as a bond issue is. Most Euro-MTN maturities are under five years.
Euro.NM
	Created on March 1, 1996, Euro.NM is a pan-European network of regulated markets dedicated to growth companies, regardless of their sector of activity or country of origin. Euro.NM member exchanges and their respective new markets consist of the Paris Stock Exchange (Le Nouveau Marché), the Deutsche Börse AG (Neuer Markt),  the Amsterdam Exchanges (NMAX), and the Brussels Stock Exchange (Euro.NM Belgium).
Euro-note
	Short- to medium-term debt instrument sold in the Eurocurrency market.
Euroyen bonds
	Eurobonds denominated in Japanese yen.
Europea, Australia, and Far East index (EAFE index)
	Stock index, computed by Morgan Stanley Capital International.
European Association of Securities Dealers Automated Quotation (EASDAQ)
	European equivalent of NASDAQS.
European Central Bank (ECB)
	Bank created to monitor the monetary policy of the 11 countries that have converted to the Euro from their local currencies. The 11 countries are: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain.
European Currency Unit (ECU)
	An index of foreign exchange consisting of European currencies, originally devised in 1979. See also: Euro.
European Monetary System (EMS)
	An exchange arrangement formed in 1979 that governs the currencies of European Union member countries.
European option
	Option that may be exercised only at the expiration date. Related: American option.
European Options Exchange (EOE)
	Now AEX-Optiebeurs. See: Amsterdam Exchanges (AEX).
European-style exercise
	A method of exercising options contracts in which the buyer can exercise the contract on the last day before expiration.
European-style option
	An option contract that can be exercised only on the expiration date.
European Union (EU)
	An economic association of European countries founded by the Treaty of Rome in 1957 as a common market for six nations. It was known as the European Community until January 1, 1994 and currently comprises 15 European countries. Its goals are a single market for goods and services without any economic barriers, and a common currency with one monetary authority.
Evaluation period
	The time interval over which funds assess a money manager's performance.
Evening up
	Buying or selling to offset an existing market position.
Event risk
	The risk that the ability of an issuer to make interest and principal payments will change because of rare, discontinuous, and very large, unanticipated changes in the market environment such as (1) a natural or industrial accident or some regulatory change or (2) a takeover, or corporate restructuring.
Event study
	A statistical study that examines how the release of information affects prices at a particular time.
Events of default
	Contractually specified events that allow lenders to demand immediate repayment of a debt.
Evergreen credit
	Revolving credit without maturity.
Evergreen funding
	A British term referring to the gradual injection of capital into a new or existing enterprise.
Ex-all
	The sale of a security without the privileges associated with the security such as dividends, voting rights, or warrants.
Ex ante return
	The expected return or anticipated return of an asset or portfolio.
Ex-dividend
	This literally means "without dividend." The buyer of shares when they are quoted ex-dividend is not entitled to receive a declared dividend. It is the interval between the record date and the payment date during which the stock trades without its dividend-the buyer of a stock selling ex-dividend does not receive the recently declared dividend. Antithesis of cum dividend (with dividend).
Ex-dividend date
	The first day of trading when the seller, rather than the buyer, of a stock will be entitled to the most recently announced dividend payment. The date set by the NYSE (and generally followed on other U.S. exchanges) is currently two business days before the record date. A stock that has gone ex-dividend is denoted by an x in newspaper listings on that date.
Ex-legal
	A municipal bond offered without a law firm's legal opinion. As the majority of bonds are issued with legal opinions.
Ex-pit transaction
	The purchase of commodities off the exchange's floor.
Ex post return
	Related: Holding-period return
Ex-rights
	Shares of stock that are trading without rights attached.
Ex-rights date
	The date on which a share of common stock begins trading ex-rights.
Ex-stock dividends
	The time period between the announcement of a stock dividend and its actual payment. The buyer of shares during this time period does is not entitled to the dividend.
Ex-warrants
	Describes a stock sale in which the buyer is not entitled to the warrant accompanying the stock.
Exact interest
	Interest paid based on the basis of a 365-day/year schedule by a bank or other financial institution as opposed to a 360-day basis (ordinary interest). Difference can be material when large principal sums of money are involved.
Exact matching
	A bond portfolio management strategy that involves finding the lowest cost portfolio generating cash inflows exactly equal to cash outflows that are being financed by investment.
Except for opinion
	An auditor's opinion reflecting the fact that the auditor is unable to audit certain areas of the company's operations because of restrictions imposed by management or other conditions beyond the auditor's control.
Excess kurtosis
	Kurtosis measures the "fatness" of the tails of a distribution. Excess kurtosis means that distribution has fatter tails than a normal distribution. Fat tails means there is a higher than normal probability of big positive and negative returns realizations.
Excess margin
	Equity present in an individual's account above the legal minimum required for a margin account or the maintenance requirement at a brokerage firm.
Excess profits tax
	Additional federal taxes placed on the earnings of a business, used only in time of national emergency such as war.
Excess reserves
	Actual reserves that exceed required reserves.
Excess return on the market portfolio
	Difference between the return on the market portfolio and the riskless rate.
Excess returns
	Difference between asset return and riskless rate. Sometimes confused with abnormal returns, returns in excess of those required by some asset pricing model.
Exchange
	A marketplace in which shares, options and futures on stocks, bonds, commodities, and indexes are traded. Principal U.S. stock exchanges are: New York Stock Exchange (NYSE), American Stock Exchange (AMEX), and National Association of Securities Dealers Automatic Quotation System (NASDAQS).
Exchange, The
	A nickname for the New York Stock Exchange. Also known as the Big Board, where more than 2000 common and preferred stocks are traded. The exchange is the oldest in the United States, founded in 1792, and the largest. It is located on Wall Street in New York City.
Exchange of assets
	Acquisition of another company by purchase of its assets in exchange for cash or stock.
Exchange controls
	Government restrictions on the purchase of foreign currencies by domestic citizens or on the purchase of the local domestic currency by foreigners.
Exchange distribution
	A sale on an exchange floor of a large block of stock in a single transaction. A broker bunches a large number of buy orders and sells the block all at once. The broker receives a special commission from the seller.
Exchange fund (also known as swap fund)
	Investment vehicle introduced in 1999 that appeals to wealthy investors with large holdings in a single stock who want to diversify without paying capital gains taxes. These funds allow investors to exchange their stock for shares in the diversified portfolio of stocks in a tax-free transaction.
Exchange members
	See: Member firm; seat
Exchange offer
	An offer by a firm to give one security, such as a bond or preferred stock, in exchange for another security, such as shares of common stock.
Exchange privilege
	A mutual fund shareholder's right to switch from one fund to another within one fund family, usually at no additional charge.
Exchange rate
	The price of one country's currency expressed in another country's currency.
Exchange Rate Mechanism (ERM)
	The methodology by which members of the EMS maintain their currency exchange rates within an agreed-upon range with respect to other member countries.
Exchange rate risk
	Also called currency risk; the risk that an investment's value will change because of currency exchange rates.
Exchange risk
	The variability of a firm's value that results from unexpected exchange rate changes, or the extent to which the present value of a firm is expected to change as a result of a given currency's appreciation or depreciation.
Exchange of stock
	Acquisition of another company by purchase of its stock in exchange for cash or shares.
Exchangeable
	Applies mainly to convertible securities. Means the issuer, if so stated, may substitute a convertible debenture for an existing convertible preferred with identical terms. Most often used when a corporation has an immediate need for equity capital and a low tax rate, and expects either or both conditions to change. This would make the debenture less attractive if the interest tax-deductibility is lost.
Exchangeable instrument
	Applies mainly to convertible securities. Bond or preferred stock that may be exchangeable into the common stock of a different public corporation.
Exchangeable Security
	Investment instrument that grants its holder the right to exchange it for the common stock of a firm other than the issuer of the instrument.
Excise tax
	Federal or state tax placed on the sale or manufacture of a commodity, typically a luxury item e.g., alcohol.
Exclusionary self-tender
	A firm's offer to buy a given amount of its own stock while excluding targeted stockholders.
Exclusive
	In the context of general equities, having sole possession of the customer order/indication; not in competition with other dealers.
Execution
	The process of completing an order to buy or sell securities. Once a trade is executed, it is reported by a Confirmation Report; settlement (payment and transfer of ownership) occurs in the U.S. between one (mutual funds) and five (stocks) days after an order is executed. Settlement times for exchange-listed stocks are in the process of being reduced to three days in the U. S. The time varies greatly across countries. In France, for example settlements are only once per month.
Execution costs
	The difference between the execution price of a security and the price that would have existed in the absence of a trade, which can be further divided into market impact costs and market timing costs.
Exempt securities
	Instrumentsexempt from the registration requirements of the Securities Act of 1933 or the margin requirements of the SEC Act of 1934. Such securities include government bonds, agencies, munis, commercial paper, and private placements.
Exemption
	Direct reductions from gross income allowed by the IRS.
Exercise
	To implement the right of the holder of an option to buy (in the case of a call) or sell (in the case of a put) the underlying security.
Exercise limit
	Cap on the number of option contracts of any one class of contract. that can be exercised within a five-day period contract. Stock option's exercise limit is typically 2000 contracts.
Exercise notice
	A broker's notification a client want to exercise a right to buy or sell (depending on the type of contract) the underlying security of the option contract.
Exercise price
	The price at which the security underlying a future or options contract may be bought or sold.
Exercise value
	The amount of advantage over a current market transaction provided by an in-the-money option.
Exercising the option
	The act of buying or selling the underlying asset via the option contract.
Exhaust price
	The low price at which a broker must liquidate a client's holding in a stock purchased in a margin account in order to meet a margin call when the client cannot meet the call.
Exim bank
	See: Export-Import Bank
Exit fee
	See: Back-end load
Exogenous variable
	A variable whose value is determined outside the model in which it is used. Related: Endogenous variable
Exotic option
	Refers to options that are more complex than simple puts or call options. For example, a Caput is a call option on a put option.
Expectations hypothesis theories
	Theories of the term structure of interest rates, which include the pure expectations theory; the liquidity theory of the term structure, and the preferred habitat theory. These theories hold that each forward rate equals the expected future interest rate for the relevant period. These three theories differ, however, on whether other factors also affect forward rates, and how.
Expectations theory of forward exchange rates
	A theory of foreign exchange rates that states that the expected future spot foreign exchange rate t periods from now equals the current t-period forward exchange rate.
Expected dividend yield
	Total amount of dividends received during the life of a futures contract or total dividends received for holding a particular stock one year. See: Current yield.
Expected future cash flows
	Projected future cash flows associated with an asset.
Expected future return
	The return that is expected to be earned on an asset in the future. Also called the expected return.
Expected return
	The expected return on a risky asset, given a probability distribution for the possible rates of return. Expected return equals some risk-free rate (generally the prevailing U.S. Treasury note or bond rate) plus a risk premium (the difference between the historic market return, based upon a well diversified index such as the S&P 500 and the historic U.S. Treasury bond) multiplied by the assets beta. The conditional expected return varies through time as a function of current market information.
Expected return-beta relationship
	Implication of the CAPM that security risk premiums will be proportional to beta.
Expected return on investment
	The return one can expect to earn on an investment. See: Capital asset pricing model.
Expected value
	The weighted average of a probability distribution. Also known as the mean value.
Expected value of perfect information
	The expected value if the future uncertain outcomes could be known minus the expected value with no additional information.
Expense ratio
	The percentage of the assets that are spent to run a mutual fund (as of the last annual statement). This includes expenses such as management and advisory fees, overhead costs, and 12b-1 (distribution and advertising) fees. The expense ratio does not include brokerage costs for trading the portfolio, although these are reported as a percentage of assets to the SEC by the funds in a Statement of Additional Information (SAI). The SAI is available to shareholders on request. Neither the expense ratio nor the SAI includes the transactions costs of spreads, normally incurred in unlisted securities and foreign stocks. These two costs can add significantly to the reported expenses of a fund. The expense ratio is often termed an Operating Expense Ratio (OER).
Expensed
	Charged to an expense account, fully reducing reported profit of that year, as is appropriate for expenditures for items with useful lives under one year.
Experience rating
	A technique insurance companies use to determine the correct price of a policy premium.
Expiration
	The time an option contract lapses.
Expiration cycle
	Dates on which options on a particular security expire. A given option will be placed in one of three cycles; the January cycle, the February cycle, or the March cycle. At any time, an option has contracts with four expiration dates outstanding: two in near-term months and two in far-term months. Last day on which an option may be exercised.
Expiration date
	The last day (in the case of American-style) or the only day (in the case of European-style) on which an option may be exercised. For stock options, this date is the Saturday immediately following the thrid Friday of the expiration month; brokerage firms may set an earlier deadline for notification of an option holder's intention to exercise. If Friday is a holiday, the last trading day will be the preceding Thursday.
Exploding term sheet
	Venture capital jargon. Often a proposed term sheet, might explode or be null and void in a fixed period set to negotiate the final contract.
Export-Import Bank (Ex-Im Bank)
	The U.S. federal government agency that extends trade credits to U.S. companies to facilitate the financing of U.S. exports.
Exposure netting
	Offsetting exposures in one currency with exposures in the same or another currency, when exchange rates are expected to move in such a way that losses or gains on the first exposed position should be offset by gains or losses on the second currency exposure.
Expropriation
	The official seizure by a government of private property. Any government has the right to seize such property, according to international law, if prompt and adequate compensation is given.
Expunge
	Used in the context of general equities. Remove any trace of an Autex indication's existence at any time. See: Cancel.
Extendable bond
	Bond whose maturity can be extended at the option of the lender or issuer.
Extendable notes
	Note with maturity that can be extended by mutual agreement between the issuer and investors.
Extension
	Voluntary arrangements to restructure a firm's debt, under which the payment date is postponed.
Extension date
	The day on which the first option either expires or is extended.
Extension swap
	Extending maturity through a swap, e.g. selling a 2-year note and buying one with a slightly longer current maturity.
External efficiency
	Related: Pricing efficiency
External finance
	Funding that is not generated by a firm's operations: new borrowing or a stock issue.
External funds
	Funds originating from a source outside the corporation to increase cash flow and to aid in expansion efforts, e.g., bank loan or bond offering.
External market
	Also referred to as the international market, the offshore market, or, more popularly, the Euromarket. A mechanism for trading securities that at issuance (1) are offered simultaneously to investors in a number of countries and (2) are issued outside the jurisdiction of any single country. Related: Internal market.
Extinguish
	Retire or pay off debt.
Extraordinary call
	Early redemption of a revenue bond because the revenue source paying the interest on the bond has been eliminated or has disappeared.
Extraordinary item
	An unusual and unexpected one-time event that must be explained to shareholders in an annual or quarterly report, e.g., employee fraud, a lawsuit, etc.
Extra or special dividends
	A dividend that is paid in addition to a firm's established or expected quarterly dividend.
Extraordinary positive value
	A positive net present value.
Extrapolative statistical models
	Models that apply a formula to historical data and project results for a future period. Such models include the simple linear trend model, the simple exponential model, and the simple autoregressive model.