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FINANCIAL GLOSSARY


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Enter Trading Term:  


Earnings Per Share (EPS)     

Net income divided by the number of shares of common stock outstanding.

Earnings Report     

A corporate financial statement that reports and nets out all earning and expenses to a profit or loss. It is therefore sometimes referred to as the profit and loss (P&L) statement.

Ease Off     

A minor and/or slow decline in the price of a market.

Econometrics     

The application of statistical and mathematical methods in the field of economics in testing and quantifying economic theories and the solution of economic problems.

Economic Exposure     

The risk on a company’s cash flow stemming from foreign exchange fluctuations.

Economic Indicator     

A statistic that indicates current economic growth and stability issued by the government or a non-government institution (i.e. Gross Domestic Product (GDP), Employment Rates, Trade Deficits, Industrial Production, and Business Inventories).

ECU     

See European Currency Unit.

EE Savings Bond     

A zero coupon bond issued directly by the Treasury in par values ranging from $5 to $10,000. Purchased at half of par, EE savings bonds mature in 12 years and are eligible for extended maturity.

Effective Date     

The first date after the cooling-off period of a new issue that the security can be offered.

Efficient Market     

A market in which the current price reflects all available information from past prices and volumes.

EFP     

Exchange for Physical. See Exchange of Futures for Cash.

Elasticity     

A characteristic of commodities that describes the interaction of the supply, demand and price of the commodity; Demand Elasticity-A commodity is said to be elastic in demand when a price change creates an increase or decrease in consumption; Supply Elasticity The supply of a commodity is said to be elastic when a change in price creates a change in the production of the commodity; Inelasticity of Supply or Demand exists in either of the reverse situations, when either supply or demand is relatively unresponsive to changes in price.

Elliot Wave     

(1) A theory named after Ralph Elliot, who contended that the stock market tends to move in discernible and predictable patterns reflecting the basic harmony of nature; (2) in technical analysis, a charting method based on the belief that all prices act as wavers, rising and falling rhythmically.

End Of Day (or Mark to Market)     

Traders account for their positions in two ways: accrual or mark-to-market. An accrual system accounts only for cash flows when they occur, hence, it only shows a profit or loss when realized. The mark-to-market method values the trader’s book at the end of each working day using the closing market rates or revaluation rates. Any profit or loss is booked and the trader will start the next day with a net position.

Endorsement     

Signature on the back of a stock certificate of the person whose name appears on the face of the same. Makes the certificate negotiable.

Equipment Trust Bonds     

Debt instruments that are issued by some corporations that are backed by "rolling stock" (such as airplanes or locomotives and freight cars).

Equity     

The residual dollar value of a futures, option, or leverage trading account, assuming it was liquidated at current prices.

Estimated Annual Income     

Projected yearly earnings.

Euro     

The currency of the European Monetary Union (EMU) which replaced the European Currency Unit (ECU).

Eurobonds     

A long-term loan issued in a currency other than that of the country or market in which it is issued. Interest is paid without the deduction of tax.

Eurocurrency     

CDs, bonds, deposits, or any capital market instrument issued outside of the national boundaries of the currency in which the instrument is denominated, i.e., Euro-Swiss francs, Euro-Deutsche marks. See Also Eurodollars, Eurodollar Bonds, Eurodollar CD.

Eurodollar     

U.S. dollar deposits placed with banks outside the U.S. Holders may include individuals, companies, banks and central banks.

Eurodollar Bonds     

Bonds issued in Europe by corporate or governmental interests outside the boundary of the national capital market denominated in dollars.

Eurodollar CD     

Dollar-denominated certificates of deposit issued by a bank outside of the United States, either a foreign bank or U.S. bank subsidiary.

Eurodollars     

U.S. dollars on deposit with a bank outside of the United States, and consequently, outside the jurisdiction of the United States. The bank could be either a foreign bank or a subsidiary of a U.S. bank.

European Central Bank     

The Central Bank for the European Monetary Union.

European Currency Unit     

The official unit of account of the European Monetary System. It is a combination or basket of the currencies from the twelve European Community countries

European Monetary Unit     

The principal goal of the EMU is to establish a single European currency called the Euro, which will officially replace the national currencies of the member EU countries in 2002. Currently, the Euro exists only as a banking currency and for paper financial transactions and foreign exchange. The current members of the EMU are Germany, France, Belgium, Luxembourg, Austria, Finland, Ireland, the Netherlands, Italy, Spain and Portugal.

Even Lot     

A unit of trading in a commodity established by an exchange to which official price quotations apply. See Round Lot.

Excess Equity     

Equity in a margin account above that which is required by Regulation T.

Exchange     

See Contract Market.

Exchange For Physicals (EFP)     

A transaction generally used by two hedgers who want to exchange futures for cash positions. Also referred to as Against Actuals or Versus Cash.

Exchange of Futures for Cash     

A transaction in which the buyer of a cash commodity transfers to the seller a corresponding amount of long futures contracts, or receives from the seller a corresponding amount of short futures, at a price difference mutually agreed upon. In this way the opposite hedges in futures of both parties are closed out simultaneously. Also called EFP (Exchange for Physical), AA (Against Actuals) or Ex-Pit transactions.

Exchange Rate     

The price of one currency stated in terms of another currency.

Exchange Rate Risk     

See Currency Risk.

Exchange Risk Factor     

The delta value of an option as computed daily by the exchange on which it is traded.

Ex-Dividend Date     

The first day on which the purchaser of the security is not entitled to the dividend. It is also the day that the price of the security drops to the next highest fraction of the dividend amount.

Execution     

The actual completion of a buy or sell order on the exchange floor.

Execution Broker ($2.00 Broker)     

Broker who owns memberships on various exchanges and executes trades on the exchanges for other brokers — execution only services on listed exchanges. The name of the clearing broker is "given up" when each trade is executed to industry clearance facilities and the trade is reported back to the introducing firm for the customer and street side processing. The charge for this service used to be $2.00 — thus the name "$2.00 Broker."

Executor     

A person appointed by the last will of the deceased to carry out the provisions of the will.

Exercise     

The procedure whereby the holder of an option notifies appropriate exchange (through the holder's broker) that he wishes to purchase the underlying instrument (in the case of a call) or deliver the underlying instrument (in the case of a put) at the exercise price.

Exercise Price     

The price per share the holder or owner of a call option would pay to buy the stock from the writer or the price the holder would receive should he sell the stock to the writer when exercising an option. See also Strike Price.

Exotic Options     

Any of a wide variety of options with non-standard payout structures, including Asian options and Lookback options. Exotic options are mostly traded in the over-the-counter market.

Expiration     

The day on which an option contract becomes void.

Expiration Date     

The last date on which an option may be exercised. Although options expire on a specified date during the month prior to the named month, an option on a November futures contract, for example, is referred to as a November option since its exercise would lead to the creation of a November futures position.

Expiration Month     

The month in which an option or futures contract ceases to exist (expires).

Ex-Pit     

See Transfer Trades and Exchange of Futures for Cash.

Ex-Rights Date     

The date after which stocks are traded without subscription rights.

Extended Maturity     

A provision whereby a bond continues to pay interest beyond its stated maturity.

Extrinsic Value     

See Time Value.

Ex-Warrants Date     

The date after which stocks are traded without buyers being entitled to warrants which are to be distributed.



 

 

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