Business / Finance Glossary

Exclusive: A firm's offer to buy a given amount of its own stock while excluding targeted stockholders.

Execution: The first day of trading when the seller, rather than the buyer, of a stock will be entitled to the most recently announced dividend payment. The date set by the NYSE (and generally followed . . . View Full Definition

Execution Costs: The process of completing an order to buy or sell securities. Once a trade is executed, it is reported by a Confirmation Report; settlement (payment and transfer of ownership) occurs in the . . . View Full Definition

Exempt Securities: 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 tim . . . View Full Definition

Exemption: Instrumentsexempt from the registration requirements of the Securities Act of 1933 or the margin requirements of the SEC Act of 1934. Such securities include government bonds, agencies, muni . . . View Full Definition

Exercise: Direct reductions from gross income allowed by the IRS.

Exercise Limit: To implement the right of the holder of an option to buy (in the case of a call) or sell (in the case of a put) the underlying security.

Exercise Notice: Cap on the number of option contracts of any one class of contract. that can be exercised within a five-day period contract. Stock option's exercise limit is typically 2000 contracts.

Exercise Price: A broker's notification a client want to exercise a right to buy or sell (depending on the type of contract) the underlying security of the option contract.

Exercise Value: The price at which the security underlying a future or options contract may be bought or sold.

Exercising The Option: The amount of advantage over a current market transaction provided by an in-the-money option.

Exhaust Price: The act of buying or selling the underlying asset via the option contract.

Exogenous Variable: A municipal bond offered without a law firm's legal opinion. As the majority of bonds are issued with legal opinions.

Exotic Option: A variable whose value is determined outside the model in which it is used. Related: Endogenous variable

Expectations Hypothesis Theories: Refers to options that are more complex than simple puts or call options. For example, a Caput is a call option on a put option.

Expectations Theory Of Forward Exchange Rates: Theories of the term structure of interest rates, which include the pure expectations theory; the liquidity theory of the term structure, and the preferred habitat theory. These theories hol . . . View Full Definition

Expected Dividend Yield: A theory of foreign exchange rates that states that the expected future spot foreign exchange rate t periods from now equals the current t-period forward exchange rate.

Expected Future Cash Flows: Total amount of dividends received during the life of a futures contract or total dividends received for holding a particular stock one year. See: Current yield.

Expected Future Return: Projected future cash flows associated with an asset.

Expected Return: The return that is expected to be earned on an asset in the future. Also called the expected return.

Expected Return On Investment: The expected return on a risky asset, given a probability distribution for the possible rates of return. Expected return equals some risk-free rate (generally the prevailing U.S. Treasury no . . . View Full Definition

Expected Return-Beta Relationship: The return one can expect to earn on an investment. See: Capital asset pricing model.

Expected Value: Implication of the CAPM that security risk premiums will be proportional to beta.

Expected Value Of Perfect Information: The weighted average of a probability distribution. Also known as the mean value.

Expenditures: The expected value if the future uncertain outcomes could be known minus the expected value with no additional information.

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