A Nasdaq stock symbol specifying that the stock has been delinquent in required filings with the SEC.
E-mini (Stock Index Futures)
An electronically traded futures contract on the Chicago Mercantile Exchange that represents a portion of the normal futures contracts. E-mini contracts are available on a wide range of indices such as the Nasdaq 100, S&P 500, S&P MidCap 400 and Russell 2000.
Early Exercise
When an option or other security is exercised prior to its maturity date.
Early Withdrawal
The removal of funds from a fixed-term investment before the maturity date, or the removal of funds from a tax-deferred investment account or retirement savings account (such as an IRA) before a prescribed time, such as the account owner's attainment of a minimum age requirement.
Earned Income
Income derived from active participation in a trade or business, including wages, salary, tips, commissions and bonuses. This is the opposite of unearned income.
Earned Income Credit - EIC
A tax credit for low-income workers. Even workers whose incomes are too small to have paid taxes can get EIC
Earning Assets
Any income-earning asset owned by a company.
Earnings (and Earnings Growth)
Analyzed on both a quarterly and annual basis. Earnings are a basic measurement of a company's ability to make a net profit and grow.
Earnings Before Interest & Tax - EBIT
An indicator of a company's profitability, calculated as revenue minus expenses, excluding tax and interest. EBIT is also referred to as "operating earnings", "operating profit" and "operating income", as you can re-arrange the formula to be calculated as follows:
Earnings Before Interest After Taxes - EBIAT
An indicator of a company's financial performance calculated as:
= Revenue - COGS - Expenses (including taxes and excluding interest)
Earnings Before Interest, Tax, and Depreciation - EBITD
An indicator of a company's financial performance calculated as:
= Revenue - Expenses (excluding tax, interest, and depreciation)
Earnings Before Interest, Taxes, Depreciation and Amortization - EBITDA
An indicator of a company's financial performance which is calculated as follows:
EBITDA can be used to analyze and compare profitability between companies and industries because it eliminates the effects of financing and accounting decisions. However, this is a non-GAAP measure that allows a greater amount of discretion as to what is (and is not) included in the calculation. This also means that companies often change the items included in their EBITDA calculation from one reporting period to the next.
Earnings Estimate
An analyst's estimate for a company's future quarterly or annual earnings.
Earnings Estimate Percentage Change
Percentage increase/decrease in earnings estimates compared to William O'Neil + Co Research Department's prior year annual EPS data.
Earnings Multiplier
The estimated price-earnings ratio adjusted for the current level of interest rates.
Effective Tax Rate
The rate a taxpayer would be taxed at if taxing was done at a constant rate, instead of progressively.
Calculated as total tax paid divided by taxable income.
Earnings Per Share
Calculated by dividing a company's total after-tax profits by the company's number of common shares outstanding. Can be used as an indicator of growth and profitability.
Earnings Per Share (EPS) Rating
Exclusive rating found in Investor's Business Daily's SmartSelect® Corporate Ratings. Stocks are rated on a 1 to 99 scale (with 99 being best) comparing a company's earnings per share growth on both a current and annual basis with all other publicly traded companies in the William O'Neil + Co database. Stocks with EPS Ratings of 80 or above have outperformed 80% of all publicly traded companies in earnings. The EPS Rating combines each company's most recent two quarters of earnings-per-share growth with its three- to five-year annual growth rate.
Earnings Per Share - EPS
The portion of a company's profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company's profitability.
Calculated as:
(Net Income - Dividends on Preferred Stock) / Average Outstanding Shares
In the EPS calculation, it is more accurate to use a weighted-average number of shares outstanding over the reporting term, because the number of shares outstanding can change over time.However, data sources sometimes simplify the calculation by using the number of shares outstanding at the end of the period.
Diluted EPS expands on the basic EPS by including the shares of convertibles or warrants outstanding in the outstanding shares number.
Earnings Per Share, Annual Results
When available, up to seven years of annual earnings per share results will be displayed. Results are adjusted for stock splits, restatement of earnings, and/or related items in order to provide truly comparable data. A blue triangle to the right of the figure denotes pre-tax, non-recurring items were included.
Earnings Per Share Percentage Change
Percentage change in earnings per share compared to the same quarter of the previous year. Figures in blue represents an increase in earnings from prior year quarter, whereas figures in red indicate a decrease in earnings per share.
A "#" (pound sign) signifies that the comparison quarter was negative and the calculation is based on a change in absolute numbers.
Earnings Per Share, Quarterly Comparison
Quarterly earnings per share compared to earnings in the same quarter of the previous year. Amount is based on continuing operations. A blue triangle to the right of the figure indicates pre-tax, non-recurring items were included (where possible, such items are normally removed to provide data better suited for comparison).
Certain utilities use running four-quarters' value, and publicly traded investment companies report net asset value (NAV) instead of earnings. Real Estate Invest Trusts report a similar item referred to as funds from operations. While it incorporates the same financial concept, it is not directly comparable to an EPS figure.
Earnings Report Due Date
Anticipated date a company will release its next earnings report.
A red asterisk - * to the right of this date indicates earnings are expected to be reported within the next four weeks.
This data item is based on the date a company reported the same quarter earnings in prior year. While most companies report earnings on the same date each year, latest information should be available from firm's web site in the form of a news release.
EPS Due will not display a date under one of the following conditions:
Historical earnings/sales data is gathered from a prospectus (i.e. company recently started trading publicly); or
A firm has not reported its earnings information more than 21 calendar days after the expected reporting date.
Earnings Season
The months in which a majority of quarterly corporate earnings are released to the public.
Earnings Stability
Indicates in percentage from one standard deviation of the variability around the trend line fitted through 3 to 5 years of earnings' history with a scale ranging from 1 to 99. Lower numbers represent more stable company earnings history.
Earnings Surprise
When the earnings reported in a company's quarterly or annual report are above or below analysts' earnings estimates.
Earnings Yield
The earnings per share for the most recent 12 months divided by market price per share.
Earnout
A contractual provision stating that the seller of a business is to obtain additional future compensation based on the business achieving certain future financial goals.
Ease Of Movement
A technical momentum indicator that is used to illustrate the relationship between the rate of an asset's price change and its volume. This indicator attempts to identify the amount of volume required to move prices. Generally a value greater than zero is an indication that the stock is being accumulated (bought) and negative values are used to signal increased selling pressure.
A high positive value appears when prices move upward on low volume. Strong negative numbers indicate that price is moving downward on low volume.
Easy-To-Borrow List
A list of securities deemed to be available for borrowing in short selling transactions because their delivery is assured. Availability is usually due to their accessible nature and/or high number of outstanding shares
Eat Well, Sleep Well
An adage that, referring to the risk/return trade-off, says that the type of security an investor chooses depends on whether he or she wants to eat well or sleep well.
Eat Your Own Dog Food
An expression describing the act of a company using its own products for day-to-day operations.
Eating Someone's Lunch
Aggressive competition that results in one company taking portions of another company's market share.
Eating Stock
Purchasing stock not because you desire it but because you are forced to do so.
EBITDA-To-Interest Coverage Ratio
A ratio that is used to assess a company's financial durability by examining whether it is at least profitably enough to pay off its interest expenses. A ratio greater than 1 indicates that the company has more than enough interest coverage to pay off its interest expenses.
The ratio is calculated as follows:
Echo Bubble
A post-bubble rally that becomes another, smaller bubble.
Eclectic Paradigm
A theory that provides a three-tiered framework for a company to follow when determining if it is beneficial to pursue direct foreign investment
Econometrics
The application of statistical theories to economic ones for the purpose of forecasting future trends.
Economic Exposure
An exposure to fluctuating exchange rates, which affects a company's earnings, cash flow and foreign investments. The extent to which a company is affected by economic exposure depends on the specific characteristics of the company and its industry.
Economic Growth
An increase in the capacity of an economy to produce goods and services, compared from one period of time to another. Economic growth can be measured in nominal terms, which include inflation, or in real terms, which are adjusted for inflation.
For comparing one country's economic growth to another, GDP or GNP per capita should be used as these take into account population differences between countries.
Economic Growth And Tax Relief Reconciliation Act of 2001 - EGTRRA
A U.S. tax law, effective for tax years beginning 2002, that made some of the most important changes to retirement plans, including increased contributions and deductibility limits for IRA and employer-sponsored plans, and expanded the portability rules for retirement plans in general. EGTRRA also increased the estate-tax exclusion and increased the generation-skipping transfer-tax exemption amounts.
Economic Growth Rate
A measure of economic growth from one period to another in percentage terms. This measure does not adjust for inflation, it is expressed in nominal terms.
In practice, it is a measure of the rate of change that a nation's gross domestic product goes through from one year to another. Gross national product can also be used if a nation's economy is heavily dependent on foreign earnings.
Economic Moat
The competitive advantage that one company has over other companies in the same industry. This term was coined by renowned investor Warren Buffett.
Economic Profit (or Loss)
The difference between the revenue received from the sale of an output and the opportunity cost of the inputs used. This can be used as another name for "economic value added" (EVA).
Economic Refugee
A person seeking refugee status in another country for purely economic reasons.
Economic Spread
1. A performance metric that is equal to the difference between a company's weighted average cost of capital (WACC) and its return on invested capital (ROIC).
2. The difference between the real rate of return on an investment and the rate of inflation in the economy
Economic Spread
1. A performance metric that is equal to the difference between a company's weighted average cost of capital (WACC) and its return on invested capital (ROIC).
2. The difference between the real rate of return on an investment and the rate of inflation in the economy
Economies Of Scale
The increase in efficiency of production as the number of goods being produced increases. Typically, a company that achieves economies of scale lowers the average cost per unit through increased production since fixed costs are shared over an increased number of goods.
There are two types of economies of scale:
External economies - the cost per unit depends on the size of the industry, not the firm.
Internal economies - the cost per unit depends on size of the individual firm.
Economy
The large set of inter-related economic production and consumption activities which aid in determining how scarce resources are allocated.
Economies of Scope
An economic theory stating that the average total cost of production decreases as a result of increasing the number of different goods produced.
Edge Act Corporation
A federally-chartered U.S. corporation that is only allowed to engage in international banking or other financial transactions related to international business.
Effective Annual Interest Rate
An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following:
Effective Duration
A duration calculation for bonds with embedded options. Effective duration takes into account that expected cash flows will fluctuate as interest rates change
. Effective Date
The date, declared by the Securities & Exchange Commission (SEC), on which shares can start trading. This usually refers to the date when shares become available for sale in an initial public offering.
Effective Yield
The yield of a bond, assuming that you reinvest the coupon (interest payments) once you have received payment.
Effective Tax Rate
The rate a taxpayer would be taxed at if taxing was done at a constant rate, instead of progressively.
Calculated as total tax paid divided by taxable income.
EEK
In currencies, this is the abbreviation for the Estonian Kroon.
Efficient Frontier
A line created from the risk-reward graph, comprised of optimal portfolios.
Efficiency Ratio
A ratio used to calculate a bank's efficiency. Not all banks calculate the efficiency ratio the same way. We've seen the ratio calculated as all of the following:
1. Non-interest expense divided by total revenue less interest expense
2. Non-interest expense divided by net interest income before provision for loan losses
3. Non-interest expense divided into revenue
4. Operating expenses divided by fee income plus tax equivalent net interest income.
For all versions of the ratio, an increase means the company is losing a larger percentage of its income to expenses. If it is getting lower, it is good for the bank and its shareholders.
Efficient Market Hypothesis - EMH
An investment theory that states that it is impossible to "beat the market" because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information. According to the EMH, this means that stocks always trade at their fair value on stock exchanges, and thus it is impossible for investors to either purchase undervalued stocks or sell stocks for inflated prices. Thus, the crux of the EMH is that it should be impossible to outperform the overall market through expert stock selection or market timing, and that the only way an investor can possibly obtain higher returns is by purchasing riskier investments.
EGP
In currencies, this is the abbreviation for the Egyptian Pound.
Elasticity
A measure of sensitivity of one variable to another. More specifically, the degree to which consumers respond to price changes.
Elder-Ray Index
A technical indicator developed by Alexander Elder that measures the amount of buying and selling pressure in the market. This indicator consists of two separate indicators known as "bull power" and "bear power". These figures allow a trader to determine the position of the price relative to a certain exponential moving average (EMA).
Bull Power = Daily High - n-period EMA
Bear Power = Daily Low - n-period EMA
Electronic Commerce - eCommerce
When a person or business uses the Internet as part of their business model.
Electronic Data Gathering, Analysis and Retrieval - EDGAR
The electronic filing system created by the Securities and Exchange Commission for the purpose of increasing efficiency and accessibility to corporate filings. This system is used by all publicly traded companies when submitting required documents to the SEC. Corporate documents are time sensitive, and the creation of EDGAR has greatly decreased the time it takes for corporate documents to become publicly available.
Electronic Communication Network - ECN
An electronic system that attempts to eliminate the role of a third party in the execution of orders entered by an exchange market maker or an over-the-counter market maker, and permits such orders to be entirely or partly executed.
Electronic Filing - e-File
The process of submitting your tax forms over the Internet, using computers and tax preparation software.
Elective-Deferral Contribution
A contribution arrangement of an employer-sponsored retirement plan under which participants can choose to set aside part of their pre-tax compensation as a contribution to the plan. Also known as "salary-deferral" or "salary-reduction contributions".
Elephants
Slang for large institutions that make trades in very high volumes.
Elevator Pitch
A slang term referring to the 20-60 seconds an entrepreneur has to interest a venture capitalist (VC) in his or her business idea.
Eligible Rollover Distribution
A distribution from an IRA, qualified plan, 403(b) plan or 457 plan that is eligible to be rolled over to another eligible retirement plan.
Election Period
The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether or not he or she will exercise his or her option.
Elliott Wave Theory
Theory named after Ralph Nelson Elliott, who concluded that the movement of the stock market could be predicted by observing and identifying a repetitive pattern of waves.
Elves
A slang term for guests appearing on the PBS television show "Wall Street Week."
Embedded Option
An option that is an inseparable part of another instrument. Compare this to a normal (or bare) option, which trades separately from the underlying security.
Embedded Value
A common valuation measure used outside North America, particularly in the insurance industry. It is calculated by adding the adjusted net asset value and the present value of future profits of a firm. The present value of future profits considers the potential profits that shareholders will receive in the future, while adjusted net asset value considers the funds belonging to shareholders that have been accumulated in the past.
Elimination Period
The length of time between when an injury or illness begins and receiving benefit payments from an insurer. Also known as the "waiting" or "qualifying" period, policyholders must in the interim pay for these services and can be thought of as a deductible.
Emergency Banking Act of 1933
A bill passed during the administration of former U.S. President Franklin D. Roosevelt in reaction to the financially adverse conditions of the Great Depression. The measure, which called for a four-day mandatory shutdown of U.S. banks for inspections before they could be reopened, sought to re-instill investor confidence in the banking system and thus, stability.
Emerging Industry
An industry, usually formed by a new product or idea, that is in the early stages of development.
Emerging Issues Task Force - EITF
An organization formed in 1984 by the Financial Accounting Standards Board (FASB) to provide assistance with timely financial reporting. The EITF holds public meetings in order to identify and resolve accounting issues occurring in the financial world.
Emerging Market Fund
A mutual fund investing a majority of its assets in the financial markets of a developing country, typically a small market with a short operating history.
Emirates Interbank Offered Rate - EIBOR
The interest rate charged by banks in the United Arab Emirates for interbank transactions. In most cases, EIBOR is the reference rate most commonly used by borrowers and lenders to conduct financial transactions in Dubai and the surrounding Emirates.
Empire Building
The act of attempting to increase the size and scope of an individual or organization's power and influence. In the corporate world, this is seen when managers or executives are more concerned with expanding their business units, their staffing levels and the dollar value of assets under their control than they are with developing and implementing ways to benefit shareholders.
Employee Benefits Security Administration - EBSA
A division of the Department of Labor (DOL) charged with enforcing the rules governing the conduct of plan managers, the investment of plan assets, the reporting and disclosure of plan information, the fiduciary provisions of the law, and workers' benefit rights.
Employee Contribution Plan
A company-sponsored retirement plan where employees make deposits (contributions) to an account. Contributions are deducted from employee's pay some companies match those payments.
Employee Retirement Income Security Act - ERISA
The Employee Retirement Income Security Act of 1974 (ERISA) protects the retirement assets of Americans, by implementing rules that qualified plans must follow to ensure that plan fiduciaries do not misuse plan assets.
Employee Share Ownership Trust - ESOT
A program that facilitates the acquisition and distribution of a company's shares to its employees.
Employee Stock Option - ESO
A stock option granted to specified employees of a company. ESOs carry the right, but not the obligation, to buy a certain amount of shares in the company at a predetermined price. An employee stock option is slightly different from a regular exchange-traded option because it is not generally traded on an exchange, and there is no put component. Furthermore, employees typically must wait a specified vesting period before being allowed to exercise the option.
Emerging Market Economy
Countries that are starting to participate globally by implementing reform programs and undergoing economic improvement.
Employee Stock Purchase Plan - ESPP
A company-run program in which participating employees can purchase company shares at a discounted price. Employees contribute to the plan through payroll deductions, which build up between the offering date and the purchase date. At the purchase date, the company uses the accumulated funds to purchase shares in the company on behalf of the participating employees. The amount of the discount depends on the specific plan but can be as much as 15% lower than the market price.
Employment Cost Index - ECI
A quarterly report from the U.S. Department of Labor that measures the growth of employees' compensation (wages and benefits). The index is based on a survey of employer payrolls in the final month of each quarter. The ECI tracks movement in the cost of labor, including wages, fringe benefits and bonuses for employees at all levels of a company.
Encumbered Securities
Securities that are owned by one entity, but subject to a legal claim by another.
When an entity borrows from another, legal claim on the securities owned by the borrower can be taken as security by the lender should the borrower default on its obligation. The securities' owner still has title to the securities, but the claim or lien remains on record. In the event that the securities are sold, the party with the legal claim on them must be given first opportunity to be paid back. In some cases, encumbered securities cannot be sold until any outstanding debts belonging to the owner of the securities are paid to the lender who holds claim against the securities.
Encumbrance
A claim against a property by another party. Encumbrance usually impacts the transferability of the property.
Ending Inventory
A book value of goods, inputs, or materials available for use or sale at the end of an inventory accounting period.
Employee Stock Ownership Plan - ESOP
A qualified, defined contribution, employee benefit (ERISA) plan designed to invest primarily in the stock of the sponsoring employer. ESOPs are "qualified" in the sense that the ESOP's sponsoring company, the selling shareholder and participants receive various tax benefits. ESOPs are often used as a corporate finance strategy and are also used to align the interests of a company's employees with those of the company's shareholders.
Endorsement
1. A legal term that refers to the signing of a document which allows for the legal transfer of a negotiable from one party to another.
2. An attachment to a document that amends or adds to it. Typically, it is an added provision to an insurance policy. Also referred to as a "rider".
Endowment
Assets, funds, or property donated to an institution, individual, or group as a source of income.
Enduring Purpose
Similar to a corporate mission statement, enduring purpose is a combination of a company's goals, attitudes, and beliefs.
Enron
A U.S. energy-trading and utilities company that housed one of the biggest accounting frauds in history. Enron's executives employed accounting practices that falsely inflated the company's revenues, which, at the height of the scandal, made the firm become the seventh largest corporation in the United States. Once the fraud came to light, the company quickly unraveled and filed for Chapter 11 bankruptcy on Dec. 2, 2001.
Enronomics
A fraudulent accounting technique that involves a parent company making artificial paper-only transactions with its subsidiaries to hide losses the parent company has incurred through business activities.
By transferring losses to off-book entities or wholly-owned subsidiaries, the now-bankrupt energy corporation Enron created one of the largest accounting scandals and securities frauds in history.
Enterprise Multiple
A ratio used to determine the value of a company. The enterprise multiple looks at a firm as a potential acquirer would, because it takes debt into account - an item which other multiples like the P/E ratio do not include. Enterprise multiple is calculated as:
Enterprise Resource Planning - ERP
A process by which a company (often a manufacturer) manages and integrates the important parts of its business. An ERP management information system integrates areas such as planning, purchasing, inventory, sales, marketing, finance, human resources, etc.
Enterprise Value - EV
A measure of a company's value, often used as an alternative to straightforward market capitalization. EV is calculated as market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents.
Enterprise-Value-To-Sales - EV/Sales
A valuation measure that compares the enterprise value of a company to the company's sales. EV/sales gives investors an idea of how much it costs to buy the company's sales. This measure is an expansion of the price-to-sales valuation, which uses market capitalization instead of enterprise value. EV/sales is seen as more accurate because market capitalization does not take into account as well as enterprise value the amount of debt a company has, which needs to be paid back at some point. Generally the lower the EV/sales the more attractive or undervalued the company is believed to be.
Entrepôt
A seaport or warehouse where goods are stored until they are shipped. The goods do not face any import or export duties upon shipment from the port or warehouse.
Entrepreneur
An individual who, rather than working as an employee, runs a small business and assumes all the risk and reward of a given business venture, idea, or good or service offered for sale. The entrepreneur is commonly seen as a business leader and innovator of new ideas and business processes.
Envelope
A trading band composed of two moving averages, one of which is shifting upwards and the other shifting downwards.
EPS Growth Rate, 3 Year
The compound 3-year growth rate calculated using the least squares fit over the latest two to three years’ earnings per share on a running 12-month basis. Growth rate will be calculated only if there is a minimum of eight trailing 4-quarter periods of positive earnings (uses a minimum of 11 quarters of data).
EPS Rating
Exclusive rating found in Investor’s Business Daily's SmartSelect® Corporate Ratings. Stocks are rated on a 1 to 99 scale (with 99 being best) comparing a company’s earnings per share growth on both a current and annual basis with all other publicly traded companies in the William O’Neil + Co database. Stocks with EPS Ratings of 80 or above have outperformed 80% of all publicly traded companies in earnings. The EPS Rating combines each company’s most recent two quarters of earnings-per-share growth with its three- to five-year annual growth rate.
Equalization Reserve
A long-term reserve that an insurance company keeps for the purpose of preventing cash-flow depletion in the event of a significant unforeseen catastrophe.
Equalizing Dividend
An additional dividend paid to eligible stockholders when their divided income is reduced due to a change the board of directors makes to the dividend payment schedule.
Equilibrium
The state in which market supply and demand balance each other and, as a result, prices become stable.
Equipment Trust Certificate
A debt instrument that allows a company to take possession of an asset and pay for it over time. The debt issue is secured by the equipment or physical assets, as the title for the equipment is held in trust for the holders of the issue. When the debt is paid off, the equipment becomes the property of the issuer, as the title is transfered to the company.
Equity
1. Stock or any other security representing an ownership interest.
2. On the balance sheet, the amount of the funds contributed by the owners (the stockholders) plus the retained earnings (or losses). Also referred to as "shareholder's equity".
3. In the context of margin trading, the value of securities in a margin account minus what has been borrowed from the brokerage.
4. In the context of real estate, the difference between the current market value of the property and the amount the owner still owes on the mortgage. Thus, it is the amount, if any, the owner would receive after selling a property and paying off the mortgage.
Equity Accounting
A method of accounting whereby a corporation will document a portion of the undistributed profits for an affiliated company in which they own a position
Equity Financing
The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation.
Equity Fund
A mutual fund that invests in a broad, well-diversified group of stocks.
Equity Income
1. Income that is earned through an investment in equity.
2. A type of mutual fund whose portfolio is invested in companies that are determined to be of high quality and have a strong history of dividend growth.
Equity Linked Foreign Exchange Option - ELF-X
A put or call option that protects an investor from foreign-exchange risk for a future sale or purchase of a specified foreign-equity portfolio.
Equity Linked Note - ELN
An instrument whose return is determined by the performance of a single equity security, a basket of equity securities, or an equity index.
Equity Market
The market in which shares are issued and traded, either through exchanges or over-the-counter markets. Also known as the stock market, it is one of the most vital areas of a market economy because it gives companies access to capital and investors a slice of ownership in a company with the potential to realize gains based on its future performance.
Equity Market Capitalization
A measure of the total market value of an equity market. The measure is calculated by taking the market capitalization of all companies in the equity market and adding them together to arrive at the capitalization for the market as a whole.
Equity Market Neutral
A hedge fund strategy that seeks to exploit differences in stock prices by being long and short in stocks within the same sector, industry, market capitalization, country, etc. This strategy creates a hedge against market factors.
Equity Method
An accounting technique used by firms to assess the profits earned by their investments in other companies. The firm reports the income earned on the investment on its income statement and the reported value is based on the firm's share of the company assets. The reported profit is proportional to the size of the equity investment. This is the standard technique used when one company has significant influence over another.
Equity Multiplier
A measure of financial leverage. Calculated as:
Total Assets / Total Stockholders' Equity
Like all debt management ratios, the equity multiplier is a way of examining how a company uses debt to finance its assets. Also known as the financial leverage ratio or leverage ratio.
Equity Risk Premium
The excess return that an individual stock or the overall stock market provides over a risk-free rate. This excess return compensates investors for taking on the relatively higher risk of the equity market. The size of the premium will vary as the risk in a particular stock, or in the stock market as a whole, changes high-risk investments are compensated with a higher premium.
Also referred to as "equity premium".
Equity Unit Investment Trust
A registered trust in which investors purchase units from a fixed portfolio of equities, which are chosen and managed by a professional money manager. Securities in the trust remain there for the life of the trust, which is most often one year. At that point they can either be liquidated at market value or rolled over into a newer, current version of the trust.
Equivalent Annual Cost - EAC
The annual cost of owning an asset over the its entire life. Calculated as:
Equivolume
A chart that compares price and volume and plots them together as one piece of data. The height of each bar represents the high and low for each period, and the width represents the volume relative to the total shares traded over the time period being viewed
Erasure Guarantee
A guarantee made by accredited institutions assuring the legitimacy and accuracy of changes made to bonds and securities.
Escheat
When property and/or an estate is transferred to the government because a person has died without a will or an heir to his or her estate.
Escrow
A financial instrument held by a third party on behalf of the other two parties in a transaction. The funds are held by the escrow service until it receives the appropriate written or oral instructions or until obligations have been fulfilled. Securities, funds and other assets can be held in escrow.
Escrow Agreement
A certificate provided by an approved bank that guarantees the indicated securities are deposited at that particular bank.
Escrow Receipt
A bank guarantee that an option writer has the underlying security on deposit and that the underlying security is readily available for delivery if the option is exercised.
Escrowed Shares
Shares held in an escrow account and in most cases cannot be traded or transfered until certain circumstances like time horizon have been reached. The use of escrow for holding shares is often done during acquisitions and for performance-based executive incentives.
Escrowed To Maturity
The condition of a bond that has been repaid in advance by means of an escrow account, which holds the funds needed to pay the periodic coupon payments and the principal.
Estate
All of the valuable things an individual owns, such as real estate, art collections, collectibles, antiques, jewelry, investments and life insurance.
Estate Planning
The overall planning of a person's wealth, including the preparation of a will and the planning of taxes after the individual's death
Estate Tax
A tax levied on an heir's inherited portion of an estate if the value of the estate exceeds an exclusion limit set by law. The estate tax is mostly imposed on assets left to heirs, but it does not apply to the transfer of assets to a surviving spouse. The right of spouses to leave any amount to one another is known as the "unlimited marital deduction".
ETB
In currencies, this is the abbreviation for the Ethiopian Birr.
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