Finance

Glossary – Finance

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There are 18 names in this directory beginning with the letter E.
Early Exercise
An exercise prior to the maturity date.

Efficient Market Hypothesis
A hypothesis that asset prices reflect relevant information.

Embedded Option
An option that is inseparable part of another instrument.

Equilibrium Model
A model for the behaviour of interest rates derived from a model of the company.

Equity Swap
A swap where the return on an equity portfolio is exchanged for either a fixed or a floating rate of interest.

Eurodollar
A dollar held in a bank outside the United States.

European Option
An option that can be exercised only at the end of its life.

Ex-Dividend Date
When a dividend is declared, an ex-dividend date is specified. Investors who own shares of the stock up to the ex-dividend date receive the dividend.

Exchange Option
An option to exchange one asset for another.

Exercise Price
The price at which the underlying asset may be bought or sold in an option contract. (Also called the strike price).

Exotic Option
A nonstandard option.

Expectactions Theory
The theory that forward interest rates equal expected future spot interest rates.

Expected Value of a Variable
The average value of the variable obtained by weighting the alternative values by their probabilities.

Expiration Date
The end of life of a contract.

Exponentially Weighted Moving Average Model
A model where exponential weighting is used to provide forecasts for a variable from historical data. It is sometimes applied to the variance rate in value at risk calculations.

Exposure
The maximum loss from default by a counterparty.

Extendable Bond
A bond whose life can be extended at the option of the holder.

Extendable Swap
A swap whose life can be extended at the option of one side to the contract.
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