Endorse
The transfer of an asset's ownership by signing the back of a negotiable instrument. For instance, an individual signs the back of a stock or bond certificate to transfer ownership.
See: Bond Power; Stock Power
Energy Mutual Fund
Mutual fund that aims to profit from stock investments in companies whose business is energy related. For example, oil, gas, solar energy, and coal companies.
See: Mutual Fund
Engineering Report
An analysis and a report completed by an engineering firm as part of the feasibility study for a proposed municipal revenue issue.
See: Municipal Bond
Entrepreneur
Individual who starts a new business. Venture capital is often used to finance the startup costs in return for an equity share. Once the business is established, an entrepreneur may choose to raise additional capital by selling equity shares to the public through an initial public offering.
See: Initial Public Offering; Venture Capital
Environmental Fund
Mutual fund that aims to profit from stock investments in companies that have a role in improving the environment, or are considered environmentally sound.
See: Mutual Fund
EPR (Earnings Price Ratio)
A corporation's earnings per share related to its current stock price. It is used to compare the attractiveness of stocks, bonds, and money market instruments--also called "earnings yield."
See: Earnings Per Share
EPS (Earnings Per Share)
Amount of a corporation's earnings that is apportioned to each outstanding share of common stock. It is calculated by dividing net income minus preferred dividends and bond interest by the number of outstanding common shares. If all common stock equivalents--such as convertible bonds, preferred stock, rights and warrants--have been exchanged into common stock, earnings per share is considered to be "fully diluted."
See: Net Income Per Share of Common Stock
EPS/T-Bill Yield Ratio
Monthly ratio of the Standard & Poor's (S & P) 500 earnings per share yield to the 3 month Treasury bill yield. It is calculated by dividing the latest 12 month earnings per share of the S&P 500 Index by the index's monthly average price for the current month. This will determine "earnings yield." Once the earnings yield is obtained, it is divided by the average 3 month T-bill yield for the same time period. If the ratio is 1.2 or greater, it is considered a good time to buy stocks. If the ratio is .9 or lower, it is considered a good time to sell stocks.
See: Earnings Per Share; Standard & Poor's 500 Index; Treasury Bill
Equalizing Dividend
Dividend paid to investors to make up for lost income because the quarterly dividend payment schedule was changed.
See: Dividend
Equilibrium Price
Price at which the supply of goods equals demand.
See: Elasticity of Supply
Equipment Leasing Partnership
Limited partnership that buys equipment such as computers and then leases it to businesses. Limited partners earn income from the lease payments. They also receive tax benefits such as depreciation. An equipment leasing partnership's profitability is dependent upon the general partner's ability to buy the right type of equipment--the type that corporations will lease.
See: General Partner; Limited Partnership
Equipment Trust Bond
A type of bond that is commonly issued by transportation companies to pay for new equipment. Title to the equipment, such as a rail car, is held by a trustee, usually a bank, until the bond is repaid. An equipment trust certificate gives the bondholder first claim on the equipment in the event that interest and principal payments are in default.
Equity
1: Ownership interest in a business endeavor; net worth.
See: Net Worth
2: Ownership interest in a corporation through the purchase of shares of stock.
3: A customers ownership in an account at a brokerage firm. The customer's equity is the account's market value of long positions (commonly just referred to as "long market value") minus the account's debit balance, or the credit balance minus market value of short positions ("short market value").
See: Credit Balance; Debit Balance; Long Market Value; Short Market Value
Equity Financing
A corporation's issuance of shares of common or preferred stock to raise money. Equity financing is commonly done when its per share prices are high--the most money that can be raised for the smallest number of shares.
See: Equity
Equity Funding
An investment that combines a life insurance policy with a mutual fund. The fund shares are used as collateral for a loan to pay the insurance premiums. Equity funding gives the investor the insurance protection benefits along with potential investment appreciation.
Equity REIT
An investment trust in which it has ownership in the property bought within the trust. REIT is an abbreviation for "real estate investment trust." Shareholders invested in equity REITs receive dividends on a building's rental income and earn appreciation on properties sold at profit.
Equivalent Taxable Yield
Comparison between a corporate bond's taxable yield and a municipal bond's tax-free yield. Depending on the investor's tax bracket, the after-tax return may be greater with a municipal bond than with a corporate bond that has a higher interest rate. The equivalent taxable yield is equal to the municipal yield divided by 100% minus the tax bracket. For an investor who is in a 28% tax bracket, for example, a 9% municipal bond would have an equivalent taxable yield of 12.5% (9%/72%).
See: Yield Equivalence
ERISA (Employee Retirement Income Security Act of 1974)
Federal law passed in 1974 that regulates the establishment, management, operation, and funding of most non-government pension and benefit plans.
See: Profit Sharing Retirement Plan
Erroneous Report Rule
A New York Stock Exchange rule dictating that a client must accept a valid execution, regardless of any reporting mistakes.
See: Execution
Escheat
Abandoned property (e.g., bank account balances) that is turned over to the state. This will also occur when a person dies without a will. If the owner or heirs later appear, the property can be claimed from the state.
Escrow
Money, securities or other property that is held by a third party until a contract's conditions are met.
See: Escrow Receipt
Escrow Receipt
A certificate issued by a bank guaranteeing that the options writer has the option's underlying securities on deposit at the bank and that they will be delivered to the broker if the option is exercised.
See: Bank Guarantee Letter; Escrow
ESOP (Employee Stock Ownership Plan)
A plan that encourages employees to purchase stock of their employer. By participating in the plan, employees are able to partake in the company's management.
Estate Tax
Tax imposed by a state or the federal government on assets left to heirs in a will. There currently is not an estate tax on property transfers between spouses, an exclusion known as the marital deduction.
See: Asset
Estate Tax Anticipation Bonds
Specified US Treasury bond issues that are accepted at par value for estate tax payments if the bonds were owned by the decedent at the time of death. Also called "flower bonds," the last of these bond issues matured in 1998.
See: Flower Bond
Estimated Tax
The anticipated amount of tax for the coming tax year that is based on the higher of regular or alternative minimum tax (AMT) minus any tax credits. Persons or entities, for whom an employer does not withhold a fixed percentage of income, need to calculate estimated tax and make quarterly payments. Total withholdings and estimated taxes paid must equal the prior year's actual tax or 90% of the estimated year's tax.
Eurobond
Bond that is denominated in a specific country's currency and sold to investors outside the country whose currency is used. The bonds are usually issued by large underwriting groups from many countries. The entity issuing the bonds does not have to be from the country whose currency is being used. Eurobonds provide an important capital source for multinational companies and foreign governments.
See: Eurodollar Bond
Eurocurrency
Money--also called "Euromoney"--deposited by corporations and governments in banks not located in their home countries. These banks are called "Eurobanks." The currencies or the banks are not necessarily European. For example, dollars deposited in a Japanese bank are considered to be Eurocurrency.
See: Eurodollar
Eurodollar
US currency held in banks outside the US, primarily in Europe.
See: Eurocurrency; Eurodollar Bond
Eurodollar Bond
Bond paying interest and principal in Eurodollars--US dollars held in banks outside the US. Eurodollar bonds do not have to register with the Securities and Exchange Commission.
See: Eurobond
European Style Exercise
A stipulation that only allows holders to exercise some US listed and almost all European options on the last day (or the day before) they expire.
See: American Style Exercise
Evaluator
An independent expert who assesses a property's value for which there is limited trading--such as antiques or rarely traded stocks. For the evaluator's services, either a flat fee may be charged or a percentage of the item's appraised value.
Event Risk
In the case of an associated takeover development, such as additional debt issuance, risk that a bond's credit quality will decline and a lower rating will be justified. Corporate bonds that include protective covenants, such as poison puts, are given event risk covenant rankings by Standard & Poor's. Ratings range from E-1 (highest) to E-5 (lowest). Covenant rankings are supplemental to basic bond ratings.
See: Indenture; Rating; Takeover
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