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Tip of the Day Index Funds are Your Friend

Index Funds are Your Friend - Every stock market or stock exchange offers indexed funds and these index funds are more beneficial to you as a new investor as they...

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Investing Glossary - E

    E-Commerce

    E-Commerce - This is a form of sales that takes place electronically. The most common means is on the internet or also through computer networks. This type of sale has become increasingly popular over the last few years. Such means has so many benefits to both the seller and the buyer. It allows for a much wider customer base, including other countries. And it affords the buyer a far greater variety of shopping options from home without a need to travel. Plus such sales allow for convenient means of payment that are advantageous to both the consumer and also the...

    Effective Annual Rate (EAR)

    Definition: The actual interest rate when accounting for compounding.  It is calculated as follows: EAR = [1 + (i/n)]^n - 1; where i = stated annual interest rate n = number of compounding periods Advice: The concept of EAR is crucial to understand if you carry a credit card balance.  The interest...

    Earnest Money

    Earnest Money? - This is a deposit made by a prospective buyer of real estate. Or it may also apply to any similar deposit made by the purchases of some government, publicly tendered contract. The purpose of this earnest money is to demonstrate the person is truly sincere about the purchase. The amount of earnest money needed will depend on the situation. It is often a percentage of the item being purchased. Said deposit is normally held in some third party account once accepted by the seller. If the buyer fails to complete the sale often this deposit is forfeited....

    Earnings Momentum

    Earnings Momentum - earnings momentum is a term used to describe a pattern of performance where a stock shows increased value from one period to another. This a prime indicator that when a stock shows earnings momentum, it most likely cause the stock price to rise as well. The increase of earnings per share at an increasing rate is also Called Earnings momentum.. An example of Earnings Momentum is when a company's earnings per share increase 10 percent then 15 percent and then 25 percent in consecutive years There doesn't have to be an exact pattern but it has to...

    Earnings Multiple

    Earnings Multiple - earnings multiple is a way of measuring how expensive a stock is.. It is calculated by using a mathematical formula where the stock market capitulations is divided by its after tax earnings. Covering a 12 month period in simpler terms the earnings multiple is the share price divided by the earnings per share. This can be used to show the history of the earnings multiple, by using the past 12 months. Or it can also be used as a tool to estimate future performance. The higher the earnings momentum, the more likely investors will contribute for future...

    Earnings Multiplier

    Earnings Multiplier - earnings multiplier is a company's estimated price /earnings ratio. The price /earnings ratio also known as the P/E ratio is the most common way to find out how expensive a stock is. The earnings multiplier is the estimated P/E ratio adjusted at the current interest rate. The purpose of the earnings multiplier is to figure out the value or to appraise the company's worth. It's also done to discount future earnings against money that can be invested at the current interest rate of the same period of time. It's similar to a discounted cash flow formula that...

    Earnings Report

    Earnings Report - The Earnings Report is a financial document that is published by a public company. The document will contain the following information. Earnings (minus all costs and taxes over a given period) Income (profit minus expenses) and expenses (any cost of doing business to generate revenue) the earnings report could be published either quarterly, or once a year. All public held company who trade on the market are required to publish and earnings report. The earnings report is a tool used by investors to retain and collect financial information that will help in deciding to invest in the...

    Earnings Surprise

    Earnings Surprise - An earnings surprise is an earnings report that is not what analysts expected... An earnings surprise usually causes substantial changes in stock prices and trading. An analyst primary job is to forecast the earrings of a company. Most often they forecast for the coming year but sometime it’s longer, up to 3 years is not uncommon. An earnings surprise is when reported earnings, differ from the consensus forecast. If the difference is positive it’s called a positive earning surprise, but if was a lower then expected, it’s called a Negative earning surprise if it is positive surprise,...

    Earnings Yield

    Earnings Yield - an earnings yield is the earning per share for the past 12 months, divided by the current price per share, Earnings yield are reported in percentages for easy bond comparisons. It is the reciprocal to the P/E ratio (price to earnings ratio). The earnings yield can be used to compare stock earnings. It also can be used to compare the whole market against bond yields... In most cases the earnings yield of equities are much higher then in risk free treasury bonds Earnings yield is basically the amount of earnings you buy for every dollars worth of...

    Eating Stock

    Eating Stock - Eating stock is a term used by investment companies and underwriters. When not enough buyers are found to purchase stock, the underwriter is forced to purchase the stock himself. When this happens the underwriter attaches a fee to cover his Ricks for not being able to find enough buyers. In some cases the underwriters still can make a profit but he/she also faces a great chance of losing on this deal The underwriter ( usually a bank or an investment company) is sometimes forced to...

    EBIT

    Definition: Earnings before interest and taxes is roughly equivalent to a company's operating profit.  Investors can look at this to see how the company is doing operationally, regardless of its capital structure (interest payments) or taxes. Advice: EBIT is a good number to look at when comparing companies within an industry.  Because companies have different capital structures, interest expenses can skew their earnings numbers.  EBIT removes this from consideration and makes for easier comparisons.  ...

    EBITDA

    Definition: EBITDA is a rough approximation for cash flow and it is calculated as revenues - expenses (excluding taxes, interest, depreciation, and amortization).Advice: EBITDA is very important for investment bankers because transactions are often priced as a multiple of EBITDA.  However, it's important to realize that this is a non-GAAP number, which means everyone calculates it different.    ...

    Economic Base

    Economic Base? - This is a term that applies to a local company that provides jobs for that community. Its positions become the economic base for a given city or town. Depending on the size of the community sometimes a single industry could be the entire economic base for a community. However, most often all the businesses in that local city compose its over all economic base. And thus it provides the information on what types of possible employment are available in that community. That is important to those seeking to work and live there....

    Economic Moat

    Economic Moat ?- An economic moat is the advantage one business has over others in its field. It is a competitive edge that this one company will have over its competition. It may be the result of its name or some other aspect of their business that gives them the majority of the customers in that market. Depending on the degree to which the company dominates will affect the level of its economic moat. A company with this type of advantage often will try to widen or maintain it in order to be sure they remain a leader in that...

    Economics

    Definition: Economics refers to how people use limited resources to meet unlimited desires.  Translation: it's the study of how we interact and make decisions about money and things we value.  AKA: "The most boring class I've taken in college." (Surprisingly) TeenAnalyst Advice: The study of economics is the study of interactions in our everyday life.  Economists seek to evaluate information to figure out why the economy works the way it does.Topics that are important to economists are inflation, interest rates, and monetary policy.  These, as well as other topics, give economists a sense of what direction the economy is going.Economics is...

    Economy Of Scale

    Economy of Scale - This is the possible cost advantages a company gets through expansion. And it will amount to ways its production costs per unit will go down in the process. Thus resulting in a more efficient and profitable type of production cost. Therefore the company contemplating such expansion needs to be sure they have accurately estimated all the factors that will affect whether a benefit comes from this type of expansion. There are many aspects the company will have to factor in so they can accurately determine any advantages. And that is why often they do not rush...

    Economy of Scope

    Economy of Scope – The economy of scope is in some ways similar to the economy of scale. However, with the issue of scope the focus is on expansion or decreasing the scope in sales and marketing. This can apply to any of the services or products that the company produces. And they may decide to streamline their variety of products because only one item is dominating the sales. Thus the sales department may decide to recommend they reduce their product options for the sake of possibly improvement in their general sales efforts and possible future sales that will take...

    Effective Par

    Effective Par - The effective par is the normal dollar value assigned to a security by its issuer. This is used for capital stocks, which pays a specific dividend... The effective par is when the issuer sets a price, usually its lower then the market price and has very little bearing on the market value of the stock. The only expectation would be for Preferred stock. In the case of Preferred stock, par value is calculated for dividend payments In the case of Debt Security, Effective par is important. It's the price paid back to investors when the...

    Electronic Commerce

    Electronic Commerce? - This is another term for eCommerce. It is associated with any buying or selling of goods or services through some electronic medium. The most common is the internet. And also this can apply to sales through computer networks. The popularity of this sales genre has been growing for sometime. There are so many new an innovative options for both sellers and buying through this option. It continues to experience a growth it its usage and demand. There are so many beneficial ways that it appeals to those who decide to use this means of commerce. ...

    Electronic Data Gathering, Analysis, and Retrieval

    Electronic Data Gathering, Analysis, and Retrieval - Electronic Data Gathering, Analysis, and Retrieval, is the Securities Exchange Commission system to transmit all financial information, and reports. This includes all financial reports, quarterly reports, annual reports, investment information and all disclosure information. This electronic network will send and receive electronic data to any company who has issued securities through an offering and which is now being traded on an open market. This includes bank who sell stocks and bonds, money market and stock brokers, and investment firms. Private companies and individuals do not have access to Electronic Data Gathering and Retrieval...

    Elevator Pitch

    Elevator Pitch? - This is a term that applies to a presentation with regards to an idea for some product or service. It is designed to given in a short period of time such as how long it takes an elevator ride. Which is approximately about thirty seconds. Such pitches are normally those done by some possible entrepreneur or other individual who is sharing the idea with what is called a venture capitalist. This is the person who will judge if the pitch merits investment. There are wide number of individuals who will use elevator pitches in order to entice...

    Embedded Derivative

    Embedded Derivative - Embedded derivative is a component of a security that is more then one component, commonly called a hybrid security. An embedded derivative can change the cash flow because it could be related to the exchange rate or the price of the commodity, or some of variable that changes often. This happens quite often when a company from a specific country (United States) enters into ac contract with a German country, creating a host contact. If the contract is denominated in a foreign currency, an embedded foreign currency is created. It then has to be separated...

    Emerging Markets

    Definition: Countries in the world that are expected to experience lots of growth.  Investing in these countries has lots of potential for big returns, but it also carry lots more risk than typical domestic investing. TeenAnalyst Advice: There's certainly a lot of potential to make money in other countries but there's two inherent risks? 1.)...

    Employee Stock Ownership Plan

    Employee Stock Ownership Plan - an Employee stock ownership plan is a trust by a corporation to its employees. It is a plan to make the employees part owners of the company by allowing them to purchase shares of the company. Contributions are made by the employee to the company. It is tax -deferred but unlike other 401 Ks and retirement plans, the contributions must be for the company's stock only, thus making them partial owners The company receives more cash flow, tax savings, and more motivated employees since they are part owners, and most likely will be...

    Employee Stock Purchase Plan

    Employee Stock Purchase Plan - An Employee Stock Purchase Plan (also known as ESPP) Is a program in which employees of a company can purchase shares of the company stock, at a discounted price... a fair market price is established and the plad is designed so employees can purchase shares of company stock for less the the fair market value. Fair market value is established when a seller f the stock agrees to price with a willing but not desperate buyer. A price is established and the ESPP allows employees to purchase stock for less then the fair...

    Employee Stock Repurchase Agreement

    Employee Stock Repurchase Agreement - An employee stock repurchase agreement is an arrangement to which a company will sell its stock to its employees but has a claus that says the company reserves the right to purchase its shares back, under certain conditions... The conditions may vary, and will be listed in the agreement. Stocks are sold to employees sometimes through an employee purchase plan, but at a later time the company may want to purchase the shares back, at market price. There are no specific reasons that a company may do such a move. One might be to...

    End or Day Order

    End or Day Order - the end of day order (EOD) is a buy or sells order that specifies that a stock be sold at a specific price. and it is to be left open till the end of the trading day . If at the end of the day, the agreement is not fulfilled the transaction is cancelled. For example a company exempts an end of the day order on stock XXX and sets a price at $25 a share, if no one purchases stock XXX by the end of the trading day, the order is cancelled...

    Endowment

    Definition: An endowment is a collection of funds that produce income for an organization.  A large source of income for universities come from their endowments. Advice: Endowments are usually set up as funds of funds and invest in long-term assets.  ...

    Enhanced Index Fund

    Enhanced Index Fund - an enhanced index fund is strategy term employed to outperform traditional indexing. The fund is aimed at an index (an indicator, representing the value of a security) but the fund is also attempting to boost returns by staying clear of the index in order to take advantage of market conditions. stock selections and leverage. Enhanced index funds attempt attract more modest returns on investment, unlike the traditional index funds or other passive management strategies Enhanced Index funs use a combination of elements of both passive management techniques, and active management techniques but...

    Enron

    Definition: Enron was a company that went filed for bankruptcy in 2001 following an accounting scandal.  At one time, Enron  was the 7th largest company in the United States. Advice: Essentially what happened was Enron created a bunch of...

    Enterprise Resource Planning

    Enterprise Resource Planning – The enterprise resource planning term is related to a system that is used to organize all the various departments of some company. This is accomplished having them all utilize the same computer system. And then this network is customized with use of given software so that each department needs are satisfied by the same programs. By using this method it is hoped it will maximize possible efficiency and also optimize potential reductions in costs. And it will allow for a more advantageous cooperation between all departments. Thus giving the business a far more smooth operation that...

    Enterprise Value

    Definition: Enterprise value is the value of a company's stock (its market cap) plus debt, minority interests, and preferred stock minus cash. Advice: The enterprise value is often seen as the takeover price for a company because this is what a company would have to pay.  The acquirer would take on the company's debt but keep the cash for itself (or to pay down the debt).    ...

    Entry Barrier

    Entry Barrier? - An entry barrier relates to anything that inhibit a business from entering a given market place. Such inhibitors can impact the company’s ability to set prices at a desired level. This may also be a term that applies to things that stand in the way of a person gaining employment in a given trade or profession. However, the most common application is to businesses. And this type of barrier can in many ways impeded upon participation in specific areas of sales. Thus, it is often a means to limit the type of competition that can occur in...

    Environmental Fund

    Environmental Fund - an environmental fund is mutual fund which trades and invests exclusively and predominantly with corporations that are in the environmental area. Environmental funds invest with companies striving to improve the environment, or are a business that is environmentally sound... The first environmental fund was established in the early 1990?s. Since then, the purpose, interest, and numbers have increased steadily ever since. Most environmental funds are based in Latin America (approx 46), but are found globally, and are growing every year. The counter argument about environmental funds that huge amounts of money invested, give very little return on...

    Envy Ratio

    Envy Ratio - envy ratio is a calculation used after a buy out of a company... This entails finding out how much the management company spent, versus the investment company, and then examining how much equity each party received... The envy ratio is very similar to the concept of leverage. Envy Ratio is primarily too figured out who spent more, and who received more between the management company and the investment company. ..Managers generally get incentives to purchase shares at a lower price so they work harder to make the company successful. The Envy ratio determines who received more, and...

    Earnings Per Share (EPS)

    Definition: The EPS is the total profits of a company divided by the number of shares.  A company with $1 billion in earnings and 200 million shares would have earnings of $5 per share. TeenAnalyst Advice: A good way to determine whether or not a company is growing is by looking at their earnings per share...

    Equity-Linked Note

    Equity-linked note - An equity-linked note is a promise to repay a debt (debt instrument) such as bills, bonds, notes etc.) The equity-linked will be determined by the performance of an individual underlying security, several securities (basket) or an equity index. When the note is linked to an equity index it is called an equity index-linked note. The securities which have equity-linked notes are protected against negative movement of the security. Securities coming with an equity-linked note usually guarantee a minimum redemption value (at par value). The investor would get one hundred percent of the original investment at maturity but...

    Equity Capital

    Equity Capital - Equity capital is capital raised by its owners through personal investing in their own company. .This arrangement is when the owners purchase their own corporation stock at regular market value. Its invested money not paid to the investors, but it's the owners own personal stock. It is listed as stock holder equity or owner's equity, on the balance sheet of the company. The value of the stock purchased through equity capital is computed by estimating the current value of everything owned by the firm, and the liabilities are subtracted equity capital may be listed under different names...

    Equity Commitment Note

    Equity Commitment Note - an equity commitment note is a type of mandatory convertible, which can be exchanged for stock once the security reaches maturity, but not before. The holders of the note are not required to purchase the equity and can opt not too. They can require the issuer to exchange the note for a future equity issue. An equity commitment note is similar to an equity contract note, but has one significant difference. Equity contract notes you are required to purchase the equity, where as you don't with an equity commitment note. Other then that difference, the notes...

    Equity Derivative

    Equity Derivative - Equity Derivative is a financial which underlying value is based on stock or securities. Options are by far the most common form of derivative an option is a contract given to a buyer by a seller an option to buy or sell a particular asset... This is them most common form of an equity derivative. By putting this form of an equity derivative ( an option) the buyer has less of a risk because of declining market and stock value A reason for trading market derivatives is to transfer or transform certain risks that are in the...

    Equity Financing

    Equity Financing - Equity Financing is simply selling common stock to investors. The investors can be individuals or corporations. In return for their cash investment, the investors receive stock (partial ownership) of the company. The more stock you buy, the more interest you have in the company another name for Equity financing is ?share capital?. Its jut another way of saying you own interest in the company buy purchasing share of the corporation for cash money. This the primary way a company achieves working capital and cash for expansion or to pay off debts. Equity fining is the alternative to...

    Equity Fund

    Equity Fund - An equity fund is a mutual fund that invests primarily in stocks in most cases the investment is in common stock. Common stock is securities that give shareholders voting rights and equity (asset) ownership in the company. An equity fund pays investors dividends which vary depending on market conditions and the over all performance of the fund... Shareholders are also rewarded with dividends form capital appreciation ( an increase in the value of the fund based on market conditions) Equity funds let shareholders benefit from a good performing company, and this along with voting rights, makes them...

    Equity Funding

    Equity Funding - the term equity funding means to invest in a common stock of a fund? It also can mean when an investment company combines mutual funds with an Insurance policy Most of the time Equity funding merely means to invest in a common stock, bond, mutual fund, etc. Adding funds to an existing security is a form of equity funding. Whenever an investor adds money to a security, it buys more share of said security. Equity funding is the act of adding funds to the security the second form of equity funding is adding an insurance policy to...

    Equity Kicker

    Equity Kicker - an equity Kicker is an offer for ownership or partial ownership of a company by a lender... Usually involving a loan agreement/. A lender may agree to charge a lower interest rate in return he will receive a share of property, ownership, or management of a company or business... Equity kickers are extra perks for lenders who want to gain interesting the company they are providing a loan for. The company receives a better interest rate, or even a loan pay off, but in turn has to surrender some ownership to the lender. This of course is...

    Equity Market

    Equity Market - An equity market is most commonly known as the Stock Market the Equity Market (stock market) is a public market for the purpose of trading stock and derivatives. At agreed prices by the buyers and sellers. Some securities are traded on exchanges and others traded privately there are several stock exchanges in the equity market (stock market). Exchanges are entities of mutual organizations, which specialize in the business of bringing buyers and sellers together to a certain selected group of stocks and securities. Some of the United States stock exchanges in clued the American stock exchange, the...

    Equity Multiplier

    Equity Multiplier - an equity multiplier is a measure of leverage. The Equity multiplier formula is derived from taking the total assets and dividing it by common stock holder's equity .The equity multiplier is the amount or percentage of assets owned by each dollar invested in a business. The higher the ratio is the more the company is relying on debt (loans) to finance and run the day to day operations of the business. The lower the ratio, the less the company is relying on debt, to run their operation. Obviously, the lower ratio will look better for investors to...

    Equity Option

    Equity Option - an equity option which is also called a stock option is an underliner of a common stock giving the holder the right to buy or sell its stock. The option will list a specified date, and at a specified price. An Option in itself is a right but not an obligation to buy or sell a portion of a stock a debt, currency, index or commodity, during a certain timetable at a certain price. This option reduces the risk factor for the buyer in a down market where stock prices fall. If the holder (the buyer) exercises...

    Equity REIT

    Equity REIT - Equity REIT takes an ownership position in its real estate investments instead of its mortgage investments... A REIT (Real Estates Investment Trust) is pooled money from several investors to purchase and manage income property... (Equity REIT) There are several advantages to a REIT. Over owning property outright. The main reason is REIT property is much easier to convert to cash (liquid). Another advantage is REIT s ability of sharing large commercial buildings, such as Hotels Strip Malls or Industrial property There is no minimum investment in REITs either They also pay yields in the form of dividend...

    Equity Research

    Definition: Equity research analysts analyze companies in order to find possible investments.  Sell-side equity research is when these analysts provide their research to clients.  Buy-side equity research is when the analysts do their own research to invest their firm's money...

    Equity Risk Premium

    Equity Risk Premium - the Equity Risk Premium is the extra return that a particular stock or the overall market must provide over the rate of treasury bills to counter act the market risk. The reason for this premium stems from the risk free trade off of risky funds who entice buyers by paying higher dividends... The fore this extra premium will compensate for this factor. The size or the premium will vary as the risk of the entire market or the stock in question changes. Therefore high-risk investments are compensated with higher premiums Equity Risk Premiums are also commonly...

    Equity Securities

    Equity Securities - Equity securities are shares or stocks that represent ownership in a company. Buyers can purchase equity securities thorough a brokerage firm or individually on line. In turn, the buyer receives a share of ownership, and the company gets cash to grow his business or to pay off debt, Equity securities generally pay off steady dividends, to the buyer, but do fluctuate in their market value depending on the ups and downs of the market and the economic situation. The performance of the business is also a main factor, which will drive the value of the stock either...

    Equity Security

    Equity Security - equity security is an instrument that signifies an ownership in a company how much ownership (equity security) you have in a company is determined by how many shares of stock you own divided by the total stocks outstanding. And example of ownership would be the following if a stock had 100 shares outstanding, and you own 3 shares, you would own 3 percent of the total corporation. Most of the time being a shareholder would give you voting rights on issues within the corporation. Sole proprietors and Limited partnerships do not sell stock, only corporations are eligible....

    Equity Swap

    Equity Swap - an Equity swap is a financial contract between two counter parts agreeing to swap cash flow at a later date. The cash flows, commonly called Legs .one leg is usually attached to a floating rate. The other leg is based on the performance the market or a stock market index this leg is gem rally called the equity leg. Most equity swaps require periodic payments or in some cases a one-time payment at the time of the swap. One reason for an equity swap world is to avoid with holding taxes or to obtain leverage. Like any...

    Equity Turnover

    Equity Turnover - an equity turnover is the corporations annual sales divided by its average stock holders equity ( which is known as the company's Net Worth) Equity turnover is a measure on how well a company is using the corporations investment equity to generates corporate revenue, and to make the corporation more profitable . When compared over a period of time, equity turnover will reveal the extent a corporation will grow with out any additional capital investments. In most cases corporations with high profit margins have a low equity turnover, and companies with a lo w profit margins have...

    Equity Value

    Equity value - Equity value, also known simply as equity refers to the different when liabilities are subtracted from the assets; what is left over is a company's equity. Equity value also refers to the interest, which is the amount a stockholder has invested in the shares of a company with regards to their ownership of common or preferred stock. Equity value is also known as shareholder's worth, book value, or net worth. Equity value in a brokerage account is the net worth of the account, or the value of the securities after any marginal requirements (what the investors must...

    Exchange Traded Fund (ETF)

    Definition: A security that tracks a benchmark and is traded on an exchange like a stock. Advice: ETF's are popular because they're easy to buy and sell, are highly liquid, have low expense ratios, and allow investors to be invested "in the market."  They are not actively managed so they seek to simply match the market return, rather than beat it.      ...

    Euroequity Issues

    Euroequity issues - Euroequity issues are European securities, which are sold on several national markets all at the same time. An international syndicate sells the euroequity issues to interested investors. Euroequity issues are actually issued outside of the country in which the issuer is domiciled. The Euroequity issues industry experienced a boom in the 1980's and then fell again. The reason that euroequites are issued outside the country of domicile is because the issues are too large for the small market in the issuer's home country; therefore the issues would be sold in various large markets such as the London...

    European Depositary Receipt

    European Depositary Receipt - A European depositary receipt (EDR) is also known as a global depository receipt. A European depositary receipt is a negotiable certificate meaning that either the price or other terms of the agreement can be negotiated. Another example of a negotiable certificate is that it can be transferred to another party in lieu of a cash payment. The European bank that is representing the securities to be traded will issue the European depositary receipt, however, these receipts originate from outside the bank's country of origin. Banks and countries such as the USA use these receipts...

    Ex-Date

    Ex-date - An ex-date will be the date in which a security has split and the price changed to reflect that split. In the case of a dividend the ex-date is the first day of the ex dividend period. Creating an ex-date in this way will facilitate all unfinished transaction prior to the record date, which is the date that an investor must own shares in order to receive a dividend. If the pending transactions have not been completed by the ex date, the stock exchange will reduce the price of the stock by the amount that would have been...

    Ex-Dividend

    Ex-dividend - An ex-dividend is a security that no longer provides the right to receive the most recent dividend. An ex-dividend can also refer to the period in between the time a dividend was announced and the actual payout. NASDAQ declares the ex-dividend date. Creating an ex-date in this way will facilitate all unfinished transaction prior to the record date, which is the date that an investor must own shares in order to receive a dividend. If the pending transactions have not been completed by the ex date, the stock exchange will reduce the price of the stock by the...

    Ex-Dividend Date

    Ex-dividend date - An ex-dividend date is the first day of the ex-dividend period (between the time the dividend was announced and payout). Creating an ex-dividend date in this way will facilitate all unfinished transaction prior to the record date, which is the date that an investor must own shares in order to receive a dividend. If the pending transactions have not been completed by the ex-dividend date, the stock exchange will reduce the price of the stock by the amount that would have been the dividend. The investor has to absorb the decrease in value because he or she...

    Ex-Rights

    Ex-rights - Ex-rights refer to the purchase of stock that no longer has the option for the investor to purchase additional shares at below market price. Ex-rights are still trading on the exchange but no longer have the rights attached because they have either expired, were transferred to another investor, or has been exercised (used up). Therefore the original rights are no longer valid for whatever reason. It goes without saying that ex-rights stocks are valued less than stocks, which still have the rights, attached to them. These attached rights may be traded separately in order for the shareholder to...

    Ex-Rights Date

    Ex-rights date - The ex-rights date refers to the date when an investor who buys stock can no longer claims any rights on the stock. Ex-rights refer to the purchase of stock that no longer has the option for the investor to purchase additional shares at below market price. Ex-rights are still trading on the exchange but no longer have the rights attached because they have either expired, were transferred to another investor, or has been exercised (used up). Therefore the original rights are no longer valid for whatever reason. It goes without saying that ex-rights stocks are valued less...

    Ex-Stock Dividends

    Ex-stock dividends - An ex-stock dividend is a security that no longer provides the right to receive the most recent dividend. An ex-dividend can also refer to the period in between the time a dividend was announced and the actual payout. NASDAQ declares the ex-dividend date. Creating an ex-date in this way will facilitate all unfinished transaction prior to the record date, which is the date that an investor must own shares in order to receive a dividend. If the pending transactions have not been completed by the ex date, the stock exchange will reduce the price of the stock...

    Ex-Warrants

    Ex-warrants - Ex-warrants also known as subscription warrants are stocks, which no longer have the warrants attached to them. Ex-warrants may have been declared but not delivered. The stock seller would still retain the warrants rather than the buyer retaining them. A warrant is a certificate, which gives shareholders the right to purchase future shares within the company either for a specific period of time, within a certain amount of years or they may have the right to purchase these new stock shares at any time. Usually there is a price stipulation where the price of the shares would be...

    Exante

    Exante Return - The exante return is the expected return on an asset or portfolio, which is the entire collection of investments an investor will have. The exante return is calculated using a proportional weighting, in this case, that would be the prices expected, weighed out proportionately among the securities to come up with the exante return based on the component assets (key assets) of the portfolio. In order for the exante return to be as accurate as possibly all probabilities which could occur that will determine the pricing of these assets must be taken in consideration and calculated as...

    Excess Return

    Definition: The excess return is the rate of return above and beyond that of the risk-free rate, which is usually the t-bill rate. Advice: Excess returns are used in CAPM when calculated the cost of equity or the expected return on an equity investment.  The ability for equities to generate higher rates of return help to compensate for the additional risks of investing in them.      ...

    Exchangeable Security

    Exchangeable security – An exchangeable security is a security whereby the owner has a right to exchange it for common stocks in a different company.  Exchangeable securities are often used in corporate takeovers such as mergers and acquisitions. The exchangeable security could be bonds or preferred stock in one company for common shares in another company.  Some issuers prefer to relinquish the exchangeable security option so that their investors who will benefit from not having to pay taxes immediately on the exchange and also to avoid any transaction cost for the exchange. The security holder may or may not be...

    Exchange Fund

    Exchange fund - A exchange fund is a type of investment fund where investors having significant holdings in a single stock can exchange that stock and diversify meaning they can exchange the holdings in that stock for smaller units or assets in a portfolio. Because no sale has actually taken place and no capital gain has occurred the exchange of stock for other assets is not deemed taxable. Exchange funds are a great way to diversify holdings while deferring taxes on capital gains. There are public and private exchange funds. A private exchange fund will facilitate investors of private equity...

    Exchange Offer

    Exchange offer - An exchange offer is an exchange offered of securities from one company for the securities of another. The exchange offer could be the exchange of bonds or preferred stock in one company for common shares in another company. However it could also mean that one company has just issued a new bond and wants to exchange that for earlier series of their own stock, which remains outstanding. The security holder may or may not be taxed for the exchange depending upon the securities, which have been exchanged. For an example of an exchange in 2001 AT&T exchanged...

    Exchange Privilege

    Exchange Privilege - An exchange privilege is a special feature, which are offered in some of the mutual funds families which allow investors to switch, or swap, from one mutual fund with a family unit to another within the same family fund unit, without paying any additional sales charges. The IRS considers this a sales and a purchase when it comes to tax purposes. This is beneficial when stock market conditions change. You are likely going to want an aggressive growth fund on an increasing market, but a bond fund when the market is decreasing. Usually, there is a limit...

    Exchange Ratio

    Exchange ratio - An exchange ratio refers to the number of shares an acquiring company's shareholders will receive in exchange for one share in the acquiring company. Each exchange ratio computed would be set according to the acquirement that would be stipulated in the merger or acquisitions agreement at the time of the merger or acquisition of the two companies. The factors, which influence the exchange ratio depends upon the value of each company concerned before the closing of the merger or acquisition. The exchange ratio would also take into consideration any potential tax advantages expected for both companies and...

    Exchange Traded Fund

    Exchange Traded Fund - An exchange traded fund is also known as a ETF. ETF is a fund that tracks what the index is doing, but can be treated and traded like a stock. These ETFs are always sold, and bought, in bundles that appear all in the same index. Actively managed mutual funds are never tracked, as they only disclose who is in their holdings a few times each year. For investors, they can do almost anything with an EFT they would do with a normal stock, even short selling them. They are traded on the stock exchange, as...

    Exchange Traded Note

    Exchange Traded Note - An exchange traded note is also known as an ETN. This is a type of security debt that combines features of a bond and feature of an exchange traded fund. Exchange traded notes can be traded on the NSE, and other such exchanges, but can be held until the maturity date, as well, just like a bond. The amount of return you receive on an exchange traded note depends on and is based on the performance of a specific market index; whereas, the value of the exchange traded note is affected by changes in credit ratings...

    Exempt Security

    Exempt security - An exempt security is a security that is exempt for the Securities Exchange Commission (SEC) or Federal Reserve board rules. Under the SEC, the security is exempt under section 3 of the SECURITIES ACT OF 1933 from all requirements of the act, with the exception of fraud, which is stated in section 17 of the act. However the terms and conditions in the Securities Act of 1933 for the exempt security would not apply to larger companies with 500 and more shareholders. However, a common type of exempt...

    Exercise An Option

    Definition: When you exercise an option, you are converting it into shares of stock. Advice: Let's say you had one contract of call options on Microsoft with a strike price of $20 per share.  If the stock was at $25, you could ...

    Exercise Price

    Definition: The exercise price is the price at which you can buy or sell shares of stock by exercising your options.  If the options are in the money, you have made a profit.  The exercise price is also commonly referred to as ...

    Exercise Ratio

    Exercise ratio - An exercise ratio is the amount of shares that can be distributed for each warrant exercised. A warrant is a certificate, which gives shareholders the right to purchase future shares within the company either for a specific period of time, within a certain amount of years or they may have the right to purchase these new stock shares at any time. Usually there is a price stipulation where the price of the shares would be greater than the market price at the time of issuance. These warrants are a form of derivatives and usually come with a...

    Exhaustion Gap

    Exhaustion gap - An exhaustion gap is a gap that occurs when a quick rise in prices starts to slow down. So the exhaustion gap represents a decline in the demand for these stocks that have been continually rising. For many analysts the exhaustion gap is just a temporary gap and it will disappear once the prices start to rise again. If you look at a chart showing the rising and falling of stock prices the area between a strong rise and a continuing fall would be the gap or hole that between the upward and downward movement. The exhaustion...

    Exhaust Price

    Exhaust price - An exhaust price is the price that a broker must obtain to liquidate a client's equity when he or she has not met his/her margin. The exhaust price will be the price that the stocks will be sold at to meet the margin requirement. This situation occurs when an investor buys on margin, which mean the investor does not have the money to buy the stocks and so he or she will borrow the money and offer these very same stocks that he or she is about to buy as collateral for the loan. If there is...

    Exit Fee

    Exit Fee - An exit fee is a commission paid or a sales charge paid when a specific individual sells their investment. These could include annuities or mutual funds. This is intended to discouraging investors from making withdrawals. This transaction charge is also known as a deferred sales change back-end load, or a redemption fee. These fees are also charged on hedge funds, and limited partnership units. Sometimes, managers of these funds attempt to devise strategies that will keep daily liquidity at a minimum, so the exit fee acts as a deterrent for an investor wishing to proceed with an...

    Expected Value

    Expected Value – An expected value is associated with the areas of random variables. The amount of all possible sums related to the random variable is the expected value. This might also involved was is the integral of what is called the probable density function as it applies to a random variable in terms of all its possible values. In order to achieve determining the expected value normally involves use of formula that will allow a factoring in all the pertinent information needed to obtain this calculation. This will enable the person to obtain the sum needed to qualify for...

    Export Management Company

    Export Management Company – This a firm that functions handling exports for several different businesses. There is a great deal of variety in this type of company. It can be owned either locally on anywhere in the world. As part of their function they can handle orders for buyers in other countries for those who it represents. This will include possessions of goods or their title that will be exported. It can also provide its own sales personal in countries that are importing what they represent. Part of their function is to handle all relevant transactions to the sales for...

    External Financing

    External financing - External financing is financing obtained from outside of the company or firm. It can provide an additional form of financing for your company. There are two types of external financing; one type is for debt and the other for equity. In external debt financing the company will take out a bank loan and is financed by the issue debentures that must be paid back at a specific time. The company is now in debt to the bondholders who buy these debentures. Should the company become bankrupt the bank loan the shareholders would be entitled to any remaining...

    External Funds

    External funds- Are funds that can be purchased or brought in from outside a company or corporation as to act as a bond offering or an equity offering. They are used by venture capitalists for an infusion of cash or funds that may be given to them as a bond offering by a company or corporation. They are also used for to describe a form of a loan or bank loan to a company or corporation as the funds can be used to expand and or a form of seasonal working conditions and needs of that corporation or company at...

    External Market

    External Market- Is the market place for the securities, that are not part of or under any of the jurisdictions of any single country worldwide. They are normally issued outside all jurisdictions of that country or any country worldwide. They are offered all over the world and have multiple investors and multiple countries they are working out of at any given time simultaneously. They have many options in them such as bonds, stocks, futures, and mutual funds in a global perspective. They are sometimes called the Euro Market as that is where most of they investors come from or operate...

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    Definition of the Day Proof Of Concept

    Proof Of Concept – (Proof-of-concept) Referring to the types and applicability, reliability or evidence, verification, confirmation and corroboration, even substantiation, or resilience of data, fact etc. Also called POC, showing its usefulness and applications, features and possibilities, allowing to an extent no to low risk exposure and exploration, prospecting if...

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