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- Earnings per share
- Earnings calculated by dividing the earnings available to common stock holders by the weighted average number of common shares outstanding over the year for which the calculation takes place.
- Earnings surprises
- Positive or negative differences from the consensus forecast.
- Economic surplus
- For an entity, the difference between the market value of all its assets and the market value of its liabilities.
- Effective convexity
- The convexity of a bond calculated with cash flows that change with yields.
- Effective date
- In an interest rate swap, the date the swap begins accruing interest.
- Effective duration
- The duration calculated using the approximate duration formula for a bond with an embedded option, reflecting the expected change in cash flow caused by the option.
- Efficient portfolio
- A portfolio that provides the greatest expected return for a given level of risk, or equivalently, the lowest risk for a given expected return.
- Embedded option
- An option that is part of the structure of a bond, as opposed to a bare option, which trades separately from any underlying security.
- Emerging markets
- The financial markets of developing economics.
- Enhanced indexing
- Also called indexing plus, an indexing strategy whose objective is to exceed the total return performance of the index.
- Equilibrium market price of risk
- The slope of the capital market line (CML). Since the CML represents the 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 return needed to compensate for a unit change in risk.
- Equity
- The residual dollar value of a futures trading account, assuming its liquidation at the going market price.
- Equity collar
- The simultaneous purchase of an equity floor and sale of an equity cap.
- Equity floor
- An agreement in which one party agrees to pay the other at specific time periods if a specific stock market benchmark is less than a predetermined level.
- Equity market
- Related: Stock market
- Equity options
- Options in which the underlying is either a stock or a stock index.
- Equity swap
- A swap in which the cash flows that are exchanged are based on the total return on some stock market index and an interest rate (either a fixed rate or a floating rate). Related: Interest rate swap
- Eurobond
- A bond that is (1) underwritten by an international syndicate, (2) offered at issuance simultaneously to investors in a number of countries, and (3) issued outside the jurisdiction of any single country.
- Eurodollar bonds
- Eurobonds denominated in U.S. dollars.
- Euroequity issues
- Securities sold in the Euromarket. That is, securities initially sold to investors simultaneously in several national markets by an international syndicate.
- Euromarket
- Related: Externa
- Euro straight
- A fixed-rate coupon Eurobond.
- Euroyen bonds
- Eurobonds denominated in Japanese yen.
- Evening up
- Buying or selling to offset an existing market position. Related: Buy in, Liquidation, Offset
- Event risk
- The risk that the ability of an issuer to make interest and principal payments will change because of (1) a natural or industrial accident or some regulatory change or (2) a takeover or corporate restructuring.
- Exchangeable security
- A security that grants the security holder the right to exchange the security for the common stock of a firm other than the issuer of the security.
- Exchange rate risk
- Also called currency risk, the risk of an investment's value changing because of currency exchange rates.
- 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.
- Exercise
- The conversion of the option by the holder into the appropriate long or short underlying futures contract.
- Exercise price
- The price at which the underlying future or options contract may be bought or sold.
- Expectations theories
- Theories including the pure expectations theory, the liquidity theory of the term structure, and the preferred habitat theory, which share a hypothesis about the behavior of short-term forward rates and also assume that the forward rates in current long-term contracts are closely related to the market's expectations about future short-term rates. These three theories differ, however, on whether other factors also affect forward rates, and how.
- Expected return
- The return expected on a risky asset based on a probability distribution for the possible rates of return.
- Expected value
- The weighted average of a probability distribution.
- Expiration date
- The last day upon which an option can be exercised. The date when an option contract ends.
- External efficiency
- Related: Pricing efficiency
- External market
- Also referred to as the international market, the offshore market, or, more popularly, the Euromarket, the mechanism for trading securities that (1) at issuance are offered simultaneously to investors in a number of countries and (2) are issued outside the jurisdiction of any single country. Related: Internal market