Effective Date The date when a swap begins to accrue interest, in the context of interest rate swaps. … [Read more...]
Effective Debt
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Effective Debt The entire outstanding debt of a company. The figure also includes, in capitalized form, any regular payments made by the company in addition to standard debt borne by it. … [Read more...]
Effective Duration
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Effective Duration Calculation of duration for an embedded option bond through the formula for determining approximate duration. The duration thus calculated reflects the expectation of fluctuation in cash flow owing to the existence of the option. Evaluates the sensitivity of price … [Read more...]
Effective Margin (EM)
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Effective Margin (EM) Term used in measuring SAT performance. Refers to amount equaling the net spread earned/ margin of income derived from the assets that is earned above and beyond costs of financing for a particular given rate of prepayment and interest. … [Read more...]
Effective Rate
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Effective Rate Evaluation of money in terms of its time value when effects of interest rate compounding are fully reflected. … [Read more...]
Efficient Capital Market
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Efficient Capital Market Markets where the prices of shares accurately reflect fresh information immediately after such information is disseminated. … [Read more...]
Efficient Diversification
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Efficient Diversification Principle that states that risk-wary investors will look for the maximum expectation in terms of return for risk of any level in the portfolio. This principle forms the basis of modern portfolio theory. … [Read more...]
Effective Duration
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Effective Duration Calculation method for bonds with embedded options. Assumption is that expected cash flows will show fluctuation in sync with changes in interest rates. … [Read more...]
Efficient Frontier
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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...]
