Efficient Frontier Grouping of portfolios built with securities that minimizes risk for expected return or maximizes return for expected risk level. … [Read more...]
Efficient Market Hypothesis
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Efficient Market Hypothesis Holds that every piece of pertinent information is completely and instantly reflected in the market price of a security thereby leading to the assumption that investors will derive equilibrium return rate. This means that investors should avoid … [Read more...]
Efficient Portfolio
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Efficient Portfolio Portfolio with the maximum expected return that can be derived for a specific risk, (that is, standard deviation), else the minimum possible risk that is unavoidable for a specific return that is expected. … [Read more...]
Efficient Set
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Efficient Set A graphical representing of a portfolio set that shows the maximum expected return for every level of risk in the portfolio. … [Read more...]
Efficiency Principle
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Efficiency Principle Theory in economics stating that the maximum social benefit from any action is obtained when the marginal social costs of allocation of resources equals the benefits from such allocation. … [Read more...]
Either/or Facility
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Either/or Facility A formal understanding allowing customers of banks to borrow domestic dollars by approaching the head office of a bank or Eurodollars from a foreign branch of a bank. … [Read more...]
Either-Way Market
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Either-Way Market Term used with interbank Eurodollar deposits signifying a market that functions both ways where identical offer and bid rates are seen. … [Read more...]
Elasticity of an Option
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Elasticity of an Option Change represented in percentage, in the option value when a 1% fluctuation in underlying stock value occurs. … [Read more...]
Electronic Depository Transfers
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Electronic Depository Transfers Use of ACH (Automated Clearing House) system to transfer funds between bank accounts. … [Read more...]
Eligible Bankers Acceptances
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Eligible Bankers Acceptances Term used in BA market. Refers to acceptances that are approved as collateral by the Fed at discount windows. The accepting banks are not required to provide reserves for such acceptances when they sell them. … [Read more...]
Eligible Commercial Entity
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Eligible Commercial Entity A party to a contract who has risk management skills related to commodity trading and undertaking acceptance or delivery of underlying assets in the futures contract. May be a dealer or market maker. The Commodities Exchange Act outlines the requirements … [Read more...]
Embedded Option
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Embedded Option Options that are a component of bond structures that give a right to bondholder or bond issuer to take action against another party. This is distinct from bare options, where the underlying security is separate from the option. … [Read more...]
Emerging Markets
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Emerging Markets A developing economy’s financial markets. … [Read more...]
Employee Stock Fund
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Employee Stock Fund Program sponsored by the firm that allows preferential treatment for employees in buying common stock shares of the employer firm. … [Read more...]
Endogenous Variable
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Endogenous Variable Using a model and determining a particular value. … [Read more...]
Endowment Funds
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Endowment Funds Funds that support institutions like private schools, colleges, hospitals, museums, and foundations through investments. Income is used for capital expenditures and operating expenses. … [Read more...]
Endowment Loan
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Endowment Loan Mortgage variant where borrower pays only interest on the mortgage, and payments that normally would have repaid the principal are directed into an endowment fund. Until the mortgage expires, the borrower does not repay the principal. … [Read more...]
End-of-Year Convention
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End-of-Year Convention Handling cash flows in the same manner as in the event that they arise at year end instead of the date convention being followed. The present is considered 0, the year end with respect to year 1 takes place in one year’s time and so on. … [Read more...]
Enhanced Indexing
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Enhanced Indexing Alternatively termed indexing plus. A strategy used in indexing with the aim of exceeding or duplicating the performance of a predetermined index with respect to its total return. … [Read more...]
Enhancement
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Enhancement Processes that have positive or favorable impact on the existing products of a firm. … [Read more...]
