Business / Finance Glossary

Except For Opinion: The sale of a security without the privileges associated with the security such as dividends, voting rights, or warrants.

Excess Kurtosis: An auditor's opinion reflecting the fact that the auditor is unable to audit certain areas of the company's operations because of restrictions imposed by management or other conditions beyon . . . View Full Definition

Excess Margin: Kurtosis measures the 'fatness' of the tails of a distribution. Excess kurtosis means that distribution has fatter tails than a normal distribution. Fat tails means there is a higher than no . . . View Full Definition

Excess Profits Tax: Equity present in an individual's account above the legal minimum required for a margin account or the maintenance requirement at a brokerage firm.

Excess Reserves: Additional federal taxes placed on the earnings of a business, used only in time of national emergency such as war.

Excess Return On The Market Portfolio: Actual reserves that exceed required reserves.

Excess Returns: Difference between the return on the market portfolio and the riskless rate.

Exchange: Difference between asset return and riskless rate. Sometimes confused with abnormal returns, returns in excess of those required by some asset pricing model.

Exchange Controls: A marketplace in which shares, options and futures on stocks, bonds, commodities, and indexes are traded. Principal U.S. stock exchanges are: New York Stock Exchange (NYSE), American Stock E . . . View Full Definition

Exchange Distribution: Government restrictions on the purchase of foreign currencies by domestic citizens or on the purchase of the local domestic currency by foreigners.

Exchange Fund (Also Known As Swap Fund): A sale on an exchange floor of a large block of stock in a single transaction. A broker bunches a large number of buy orders and sells the block all at once. The broker receives a special co . . . View Full Definition

Exchange Of Assets: Investment vehicle introduced in 1999 that appeals to wealthy investors with large holdings in a single stock who want to diversify without paying capital gains taxes. These funds allow inve . . . View Full Definition

Exchange Of Stock: Acquisition of another company by purchase of its assets in exchange for cash or stock.

Exchange Offer: Acquisition of another company by purchase of its stock in exchange for cash or shares.

Exchange Privilege: An offer by a firm to give one security, such as a bond or preferred stock, in exchange for another security, such as shares of common stock.

Exchange Rate: A mutual fund shareholder's right to switch from one fund to another within one fund family, usually at no additional charge.

Exchange Rate Mechanism (ERM): The price of one country's currency expressed in another country's currency.

Exchange Rate Risk: The methodology by which members of the EMS maintain their currency exchange rates within an agreed-upon range with respect to other member countries.

Exchange Risk: Also called currency risk; the risk that an investment's value will change because of currency exchange rates.

Exchange, The: The variability of a firm's value that results from unexpected exchange rate changes, or the extent to which the present value of a firm is expected to change as a result of a given currency . . . View Full Definition

Exchangeable: A nickname for the New York Stock Exchange. Also known as the Big Board, where more than 2000 common and preferred stocks are traded. The exchange is the oldest in the United States, founded . . . View Full Definition

Exchangeable Instrument: Applies mainly to convertible securities. Means the issuer, if so stated, may substitute a convertible debenture for an existing convertible preferred with identical terms. Most often used w . . . View Full Definition

Exchangeable Security: Applies mainly to convertible securities. Bond or preferred stock that may be exchangeable into the common stock of a different public corporation.

Excise Tax: Investment instrument that grants its holder the right to exchange it for the common stock of a firm other than the issuer of the instrument.

Exclusionary Self-Tender: Federal or state tax placed on the sale or manufacture of a commodity, typically a luxury item e.g., alcohol.

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