The role of this glossary is to present brief definitions of most of the key concepts in economics and finance (in total 1064 names-definitions) as well as security markets (financial, capital, money) with aim the reader to be able to understand and become familiar with the terminology in the analyses that will present in the category economics.
Additionally, we hope that the reader by acquiring intimacy with the economic terminology, he will also love the science/art of economics, giving to it a significant part of his personal time.
In the following glossary we tried to include the most well-known definitions and terms in the field of Economics & Finance. If you still find that a term or definition is missing and you know that it can be included in this glossary, please do not hesitate to contact us via the contact form of our web-site (Contact Us) and the Liberal Globe will edit it and will include it.
Glossary Economics & Finance
There are currently 49 names in this directory beginning with the letter E.
econometric model
is named a model whose equations are estimated with the use of statistical procedures.
Economic growth
is named all the secular rises in the output of an economy. It is usually measured by the annual growth in GDP per capita.
Economic rent
is named the returns to factors of production that surpass the minimum amount necessary to keep those factors of production in operation.
Economies of scale
is named the reduction in the transaction costs per currency unit of transaction as the size (scale) of transaction increases.
Edge Act Corporation
is a special subsidiary company of US banks with primarily aim to involve in international banking transactions.
Effective exchange rate
is named an index which is consisting of a weighted average of a country's exchange rates vis-à-vis its main trading countries.
Efficiency wages
are named those wages which are paid in excess of the marginal productivity of labour in order to give enough motives to the workers to put more effort in their work.
Efficient portfolio frontier
is named the curve or the line on which are depicted the portfolios with the most preferable combinations of standard deviation and expected return that can be achieved by putting risky assets into portfolios.
Endogenous and exogenous variables
endogenous variables are named those that are explained by economic principles; on the other hand, exogenous variables are named those which are measured as determined outside the system under study.
Endogenous growth
is named the explanation of the growth which arise as the result of decisions which are taken by private agents in response to economic conditions, rather than as result to the exogenous of technical progress.
Endowment
are called the exogenous resources that economic agents expect to have both in the present and the future.
Equation of exchange
is named the equation (NI=QM) that relates nominal income to the quantity of money.
Equilibrium rate of unemployment
is called the unemployment rate which arise when employment and unemployment balance in a stable point. In other words, when aggregate demand for labour is met by aggregate supply of labour. There is a possibility that the labour supply to not perfectly reflect individuals' preferences, this unemployment may be in part involuntary 9structural unemployment) but may also mirror the efficiency of the labour market (frictional unemployment).
Equities
are called those instruments which represent claims to share the net income and the assets of a business firm (such as common stock).
Equity efficiency trade-off
is called the situation which arise when an improvement in equity among society's members often has a negative effect on the economy's efficiency.
Eurodollars
are US dollars that are deposited in foreign banks outside of the USA or in foreign branches of US banks.
European option
is named a market instrument (option) that can only be exercised on its expiration date.
Ex-dividend date
is named the date on which ownership of stock is determined for purposes of paying dividends. Stockholders who purchase their stocks before the ex-dividend date are eligible to receive the dividend in question. Stockholders who purchase their stocks on or after the ex-dividend date are not entitled to the dividend payment.
Ex-post alpha (differential return)
is called the factor of a portfolio which is estimated over an evaluation interval as the difference between the average return on the portfolio and the equilibrium average return on a portfolio of equal market risk. A portfolio's Alpha is estimated on an ex-post basis.
Ex-post selection bias
is a security selection technique which is used in the development of a security valuation model. According to this technique we use the securities that have performed well, and we avoid the securities that have performed poorly, thus making the model appear more effective than it is.
Ex-rights date
is named the date on which is decided if the stockholders who purchase new stocks are entitled to receive the stock rights. Stockholders who purchase their stocks before the ex-rights date receive the rights in question. Stockholders who purchase their stocks on or after the ex-rights date are not entitled to the stock rights.
Excess demand
is named a situation which arise in a market where, at the main price, the quantity demanded by market participants exceeds the quantity supplied.
Excess return
is named the difference between the rate of return of an asset and the rate of return of a no-risky asset.
Excess supply
is named the situation which arise when the quantity supplied exceeds the quantity demanded.
Exchange distribution or acquisition
is called a trade involving a large block of stock on an organized security exchange whereby a brokerage firm tries to implement the order by finding enough offsetting orders from its customers.
Exchange rate overshooting
is called a situation in which the exchange rate changes by more than in the short-run than it does in the long-run when the money supply also changes.
Exchange risk (currency risk)
is named the uncertainty which arise in the return on a foreign financial asset due to volatility regarding the rate at which the foreign currency can be exchanged into the investor's own currency.
Exchanges
are the sort names for the secondary markets in which both buyers and sellers of securities (or their representatives' brokers) meet in a central location to conduct trades.
Exercise price (striking price)
in the case of a call option, is the price at which an option buyer may purchase the underlying asset from the option writer (seller). On the other hand, in the case of a put option, is the price at which an option buyer may sell the underlying asset to the option writer (seller).
Exogenous variables
in econometrics, is named the economic variable which is taken as given and is used in the model with aim to explain the model's endogenous variables.
Expectations hypothesis
in the context of interest rates (yield curve) is named the hypothesis which states that the amount that the interest rate on a long-term bond will equal an average of short-term interest rate that people expect to arise over the life of the long-term bond. In the case of an asset, is the hypothesis that mention that the futures price of an asset is equal to the expected spot price of the asset on the delivery date of the futures contract.
Expected rate of inflation
is that percentage of inflation experienced over a given period that was anticipated by investors.
Expected return
is named the return on a security (or portfolio) over a holding period that an investor anticipates receiving.
Expected return vector
is a column of numbers that match to the expected returns for a set of securities.
Expected value
is a measure of central tendency of the probability distribution of a random variable. In the same manner, the mean of the random variable.
Expected yield-to-maturity
is named the yield-to-maturity on a credit market instrument (i.e. bond) which is estimated as a weighted average of all possible yields that the credit market instrument might produce under different scenarios of default or late payments, where the weights are the probabilities of each scenario occurring.
Expenditure multiplier
is named the factor which arise as the ratio of the change in aggregate output to a change in investment spending (or autonomous spending).
Expiration date
on an option contract is called the date on which ceases the right to buy or sell a security.
Exponential weighting
is named the method of applying weights to a set of data points (i.e. returns or yields), with the weights declining exponentially over time. In time series, this results in weighting recent data more than data of the distant past.
Export-led expansions
are those expansions which are driven by an increase in foreign demand for domestic output.
