FINANCIAL
GLOSSARY : E
Early-redemption
penalty
A financial penalty
that is levied by mortgage lenders for switching to another lender.
This is payable on certain types of loans, such as, discount and fixed-interest
rate loans upon early redemption or part redemption during the specified
early redemption period.
Earnings
per share (EPS)
The EPS is calculated
by dividing the earnings (pre-tax profits) by the number of shares
in issue.This is one of the key ratios that is used in the valuation
of shares as it expresses the amount of profit a company manages to
make per share.
Emerging
markets
The Stock Markets
based in developing countries that have a low income per head compared
with the developed world. These are attractive markets for speculative
investors in the western countries because there is potential for
rapid economic growth but at a higher economic and political risk.
Endowment
policy
A policy which
combines investment with insurance and runs for a specific period.
It builds up a cash value, generally on either a with-profit or with
unit-linked basis and is paid out at the end of the policy term or
when you die (whichever is the earliest).
Enhanced
Scrip Dividend
A dividend that
is in the form of shares rather than cash. To encourage shareholders
to take the scrip dividend the value of the shares is usually greater
than the cash dividend.
Equity
capital
Another term for
ordinary share capital - the owners of the equity capital are collectively
the owners of the company. They are the risk bearing shareholders
as they benefit from capital growth if the share price rises but bear
the highest risk if the company is wound up, as they will be last
to receive payment.
Ethical
investments
Investments that
are made in companies that make a postive contribution to the world
and are kind to the environment. Most ethical investments are made
through a managed investment fund such as a unit trust or pension
fund, as it is difficult for an individual investor to judge whether
a particular company is ethical or not.
Euro
The Euro is Europe's
new unit of currency that was officially launched in January 1999
in eleven countries in the European Union. All of the national notes
and coins in the relevant countries will ceased to be legal tender
by the end of February 2002, however, banks will contine to accept
them until 2004. Britain has not yet signed up to the referendum to
adopt the Euro and therefore still keeps the pound.
Eurosterling
bond
A corporate bond
issued by a UK company that wants to raise money in the international
markets instead of its home market.
Exceptional
items
Items listed in
a company's profit and loss account that are associated with the normal
activity of the company but are exceptional in their size.
Ex-dividend
A share sold without
the right to the next declared dividend payment.
Execution
only
A type of sharedealing
service where the customer make his or her own investment decision
and the stockbroker just carries out the transaction.
Exercise
price
The specific price
paid for shares if an investor exercises a warrant or option to buy.
Exit charge
Payment that has
to be made by an investor selling an investment.
Exposure
The vulnerability
that is attached with an investment. There are different types of
exposures that an investment may have, such as, currency exposure
or economic exposure. For example, currency exposure is the proportion
of your share portfolio that is at risk to exchange rate fluctuations.
Extraordinary
general meeting (EGM)
A meeting called
either by the Board of Directors or shareholders of a company to discuss
special business. This would include matters, such as, a proposed
takeover or merger, or a substantial change in the way the business
is to be run. (If the meeting is called by shareholders then they
must hold at least 10% of the voting rights of the company's shares).
