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Dutch Auction:
A system of auction in which the price of an item is progressively lowered till a bidder responds and a sale is concluded.
ECU:
European Currency Unit.
EEC:
European Economic Community.
ELSS:
Equity Linked Saving Schemes. Introduced in 1990 under the now-repealed Section 88CCB of the Income Tax Act. The duration of such is now embraced by Section 80 of thesame Act. The duration of such a scheme is ten years, and any gains made under the scheme will be treated as long term capital gains. The original investment, up to Rs 10,000 will be added to the investor's income in the year of receipt. These schemes are run by the Unit Trust of India, LIC, and various banks.
EOU:
Export Oriented Unit.
EPS or Earning Per Share:
one of the most widely used indicators of the worth of a share. It shows what a company has earned for each of its shares. It is a ratio calculated by dividing the net profit after tax (PAT) by the number of equity shares of a company, which include any shares the company is committed to issuing, but has not yet issued, such as those arising out of conversion of debentures.
EPZ or Export Processing Zone:
Industrial locations such as Kandla in Gujarat, at Santa Crus in Bombay, at Falta near Calcutta, at NOIDA next to Delhi, earmarked specifically for export production. EPZs, or Free Trade Zones as they are often called, is a concept tried out in several other countries as a method of increasing exports. This is sought to be achieved by providing both tax concessions and easy impots-typically duty-free and red-tape-free- of machinery and raw materials,etc. required for export oriented production and commercial infrasturcture needed by exporters. From an investment point of view, if a company has some manufacturing facilities in an EPZ that would be an indicator of its beingserious about exports-and export profits are tax-free. The extent of the tax-free profit component, and its significance on the company's bottom line and Eps, etc., must be carefully looked into before jumping to the conclusion of it being a super-profitable company.
Each Way:
When a broker is involved in both buying and selling a stock he earns each way commission. He has to have a seller and a buyer for the same stock.
Early Bargain:
A bargain struck after the official closing of the stock exchange. The bargain is treated as having been struck at the begining of the next trading day. Also called AFTER_HOURS DEAL.
Earning Per Share:
See EPS
Earnings Momentum:
A Pattern of increasing growth of earnings per share, indicatin healthy growth, resulting in the rise of the price of a company's share.
Earnings Yield:
The net profits of a company divided by the total market price of its shares. It is distinct from dividend yield, which relates to distributed profits only. The earnings yield of growth companies is generally low, as their high share prices have taken into consideration(i.e., discounted) their future profits. Conversely, a high earnings yield may indicate that the market price of the shares is falling because investors do not see much future growth in the company.
Earnings to Equity Ratio:
profit after tax minus dividend on preference shares divided by equity share capital plus resedrves, and the sum multiplied by a hundred. This ratio indicates how profitablythe companyis making use of its capital.
Easy Falling:
See BEAR MARKET TERMS.
Easy Money:
Economic condition in which it is easy to secure credit, as the Reserve bank of India has lowered the rates and relaxed money supply. See CHEAP MONEY,TIGHT MONEY.
Economic Growth Rate:
Annual percentage of change in the gross national product. This is adjusted for inflation to arrive at the real economic growth rate. If two consecutive quarters show a drop in the growth rate, it is recession. Two consecutive rises point to an expanding economy.
Economic Indicators:
These show trends in the national economy which influence share prices. The chief indicators are: GNP (or Gross National Product, the sumtotal of goods and servicesproduced in a country in a year), employment figures, agricultural production, industrial production, bank deposits, imports and exports, money supply, index of wholesale prices, and interest rates.
Economic Times:
A daily newspaper devoted to general economic news, news about companies, and share market prices of the previous day. Published from Delhi, Bombay, Calcutta, and Bangalore. A special feature is the Investor's Guide on Mondays, containing reports on the performance of a number of companies, news of new issues, performance indicators of nearly 1,000 companies, and other corporate news like book closures, dividend and bonus announcements, and a general survey of recent stock market behavior. It also maintains its own index of share price movements.
Efficient Market Hypothesis:
The hypothesis that holds that the financialmarket is in possession of all available information which may influence the price of a share or financial security, that as a result there is perfect competition in the financial market. Perfect competition in the stock market context implies that buyers and sellers have perfect knowledge, and neither are in possession of any information unknown to the others. Since the present prices in the stock market have already assimilated the available information, expectations of future prices are revised randomly. See RANDOM WALK.
Efficient Portfolio:
A portfolio which ensures maximum return for an accepted level of risk or a minimum level of risk for an expected return.
Efficient Price:
A price that does not fluctuate far from the intrinsic value of a security; a price which gives a fair indication of the value of a SECURITY.
Either-or-Order:
This gives the broker a choice, either to buy or to sell, not both. The execusion of either will cancel the other. For example, in a buy limit or buy stop order the limit order may be below the current market, whereas the buy stop order is above it.
Eligible Securities:
Shares, debentures, and bonds which banks will accept as COLLATERAL for loans. Only listed shares are eligible, although bankstend to make their own rules about what they will accept among the eligible securities.
Elliott Wave Theory:
A theory of recognition of market trend which postulates that the market follows a pattern of five waves up and three waves down, to form a cycle of eight waves and that it moves in short and long cycles.
Employee Buyout:
The control of a company passing on to the employees through acquisition of shares individually or by an employee's trust, usually in the face of a closure.The buyout price offered is usually more than what the erstwhile management of the company could obtain by selling its assets. In some cases government controlled companies are offered for employee buyouts, when the closure of a company will cause large-scale unemployment.
Employee Participation:
Appointment to the board of directors of a representative of the employees to take part in policy decisions.
Employee Share-Ownership Plan:
Apart from altruistic reasons, as a means of motivating workers to work better to share in the success of the company, shares are sometimes allotted to the employees by reserving a quota for them. One company in the UK, Marks &Spencers, gives every employee a share in the company which, however, they have to sell back to the company, should they wish to leave it.
Endorse:
To guarantee the authencity of some document by putting one's signature. There may be two kinds of endorsement on share certificates; endorsement of the payment of all money, making the share fully paid up, and endorsement of transfer of ownership, made at the back of the share certificate, indicating the new folio number and the name of the transferee.
Enterpreneur:
A person, oftentechnically qualified, who takes the risk of starting a new enterprise. Since at the intial stage he cannot float a public issue he amy to approach a VENTURE CAPITAL fund which, in return for an equity stake will put up the money.
Ex-rights:
See XR
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