Glossary of ‘Financial Terms’ starting with Alphabet ‘E’, i.e. ‘Meaning’ or ‘Definition’ of Common and Unusual terms relating to Accounting, Auditing, Company Law, GST, Income Tax, Investments, etc., along with the ‘Context’ in which they are used.
EDGAR (Electronic Data Gathering, Analysis and Retrieval System) is an electronic system formulated by Securities Exchange Commission, USA, which is used by companies to transmit documents required by SEC relating to corporate offerings and ongoing disclosure obligations.
EDIFAR is Electronic Data Information Filing and Retrieval system. Securities and Exchange Board of India (SEBI) in association with National Informatics Centre (NIC) has set up the EDIFAR to facilitate filing of certain documents/statements by the listed companies online on the Web site (www.sebi.gov.in). This would involve electronic filing of information in a standard format by the companies.
Effective Sale (U.S)
A round lot transaction consummated on the floor of the New York Stock Exchange after entry of an odd-lot order by a customer. Its price is used to determine the execution price for odd-lot order after consideration of the dealers’ fee.
Electronic fund transfer (EFT)
System which utilizes computer and electronic components in order to transfer money or financial assets. EFT is information based and intangible.
Employee Stock Option
“Employee stock option” means the option given to the whole-time directors, officers or employees of a company which gives such directors, officers or employees, the benefit or right to purchase or subscribe at a future date, the securities offered by the company at a predetermined price.
Employee Stock Purchase Scheme (ESPS)
“Employee stock purchase scheme (ESPS)” means a scheme under which the company offers shares to employees as part of a public issue or otherwise.
Term used to describe the financial markets of developing countries. Definitions vary of which countries are emerging and which are not. However, the emerging market indices compiled by the IFC and Morgan Stanley are often used as benchmarks.
Fee paid by an investor when purchasing units in a trust or managed fund. The fee is included in the price that new investors pay.
The ownership interest in a company of holders of its common and preferred stock.
The difference between the expected return from holding stock and from holding riskless bonds.
Unit Trust which invests mainly in equity shares with a component in cash and in fixed interest investment.
The trust account established by a broker under the provisions of the license law for the purpose of holding funds on behalf of the broker’s principal or some other person until the consummation or termination of a transaction.
Eurobonds are issued in a specific currency outside the currency’s domicile. They are not subject to withholding tax and fall outside the jurisdiction of any one country. The Eurobond market is based in London. Not to be confused with euro-denominated bonds.
Equities underwritten and distributed to investors outside the country of origin of the issuer.
A put or call that can be exercised only on its expiration date. The term has nothing to do with where the option is traded or what underlies it. Stock options listed on European option exchanges are usually American Style options in the sense that they can be exercised prior to the expiration date.
Economic Value Added. Conceived by consultants Stern Stewart & Co, EVA is a popular method of measuring a company’s profitability. EVA is calculated by taking the total cost of capital from post-tax operating profit.
Means ‘Without’. A price so quoted excludes recently declared dividends (xd) rights (xr) or bonus shares (xb).
Excess Spread Policy (U.S.)
A NASD requirement that prohibits market makers from entering quotations in the NASDAQ system that exceed prescribed parameters for maximum allowable spreads.
Regulated market place where capital market products are bought and sold through intermediaries.
Exchange Rate Risk
The risk that adverse movements in exchange rates lead to capital losses in assets or revaluation of liabilities.
A derivative which is listed and traded at an organised market-place. Derivatives exchanges generally provide standardised contracts and central clearing facilities for participants.
Exchange traded funds (ETF)
A security that tracks an index but has the flexibility of trading like a stock.
External Commercial Borrowings
In India External Commercial Borrowings are defined to include commercial bank loans, buyers’ credit, suppliers’ credit, securitised instruments such as Floating Rate Notes and Fixed Rate Bonds, etc., credit from official export credit agencies and commercial borrowings from the private sector window of Multilateral Financial Institutions such as International Finance Corporation (Washington), ADB, AFIC, CDC etc. ECBs are being permitted by the Government as a source of Finance for Indian corporates for expansion of existing capacity as well as for fresh investment.
The date on or after which the buyer of a security is not entitled to the dividend already declared.
The date on which the official quotation for a share is marked XR i.e. ex rights, in the daily official list.
Fees charged by mortgage trusts/mutual funds on a sliding scale as penalty for early withdrawal.
The return an investor might expect on an investment if the same investment were made many times over an extended period. The return is found through the use of mathematical analysis.
The amount by which the market price of an option exceeds the amount that could be realized if the option were exercised and the underlying commodity liquidated. Also known as time value.