Glossary

Click on a letter to browse the terms associated with it.

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Economic Exposure	Reflects the impact of foreign exchange changes on the future competitive position of a company.
Elliot Wave Principle	A system of empirically derived rules for interpreting action in the markets. It refers to a five-wave/three-wave pattern which forms one complete bull market /bear market cycle of eight waves.
Emerging markets	The financial markets of developing economies.
Extrinsic Value	The amount of money option buyers are willing to pay for an option in the anticipation that, over time, a change in the underlying futures price will cause the option to increase in value. In general, an option premium is the sum of time value and intrinsic value. Any amount by which an option premium exceeds the option's intrinsic value can be considered time value. Also referred to as extrinsic value.
Economic and Monetary Union	The irrevocable fixing of exchange rates between member currencies and their replacement by a single European currency, the euro. The euro is to be issued by a future European central bank, to be independent of political control and federal in nature. All countries which fulfil the five convergence criteria in 1998 will proceed to EMU in 2000. The UK and Denmark have secured opt-outs from EMU. Sweden's joining is subject to ratification by parliament.
Equity	The residual dollar value of a futures trading account, assuming its liquidation at the going market price.
European Currency Unit	A basket of the member currencies. As a composite unit, the ECU consists of all the European Community currencies, which are individually weighted. It was created by the European Monetary System with the eventual goal of replacing the individual European member currencies.
European Monetary System	A system designed to stabilise if not eliminate exchange risk between member states of the EMS as part of the economic convergence policy of the EU. It permits currencies to move in a measured fashion (divergence indicator) within agreed bands (the parity grid) with respect to the ECU and consequently with each other. Italy and the UK are currently not part of the system. Only Germany and the Benelux are within the current narrow band.
Exchange rate risk	Also called currency risk, the risk of an investment's value changing because of currency exchange rates.
Exchange For Physicals	A technique in which a physical commodity position is traded for a futures position.
Execution costs	The difference between the execution price of a security and the price that would have existed in the absence of a trade, which can be further divided into market impact costs and market timing costs.
Exercise Notice	A formal notification that the holder of an option wishes to exercise it by buying or selling the underlying stock at the exercise price.
Exercise Price (Strike Price)	The price at which an option may be exercised
Expiry Date	The last day on which the holder of an option can exercise his right to buy or sell the underlying asset.
Exposure	The total amount of money loaned to a borrower or country. Banks set rules to prevent overexposure to any single borrower. In trading operations, it is the potential for running a profit or loss from fluctuations in market prices.