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Glossary of Investment Terms: E

Economic Exposure
Reflects the impact of foreign exchange changes on the future competitive position of a company.

Economic Indicator
A government issued statistic that indicates current economic growth and stability. Common indicators include employment rates, Gross Domestic Product (GDP), inflation, retail sales, etc.

Economic and Monetary Union (EMU)
The irrevocable fixing of exchange rates between member currencies and their replacement by a single European currency, the euro. The euro is to be issued by a future European central bank, to be independent of political control and federal in nature. All countries which fulfil the five convergence criteria in 1998 will proceed to EMU in 2000. The UK and Denmark have secured opt-outs from EMU. Sweden's joining is subject to ratification by parliament.

Elliot Wave Principle
A system of empirically derived rules for interpreting action in the markets. It refers to a five-wave/three-wave pattern which forms one complete bull market /bear market cycle of eight waves.

End Of Day Order (EOD)
An order to buy or sell at a specified price. This order remains open until the end of the trading day which is typically 5PM ET.

EURO
The currency of the European Monetary Union (EMU). A replacement for the European Currency Unit (ECU).

European Central Bank (ECB)
The Central Bank for the new European Monetary Union.

European Currency Unit
A basket of the member currencies. As a composite unit, the ECU consists of all the European Community currencies, which are individually weighted. It was created by the European Monetary System with the eventual goal of replacing the individual European member currencies.

European Monetary System
A system designed to stabilise if not eliminate exchange risk between member states of the EMS as part of the economic convergence policy of the EU. It permits currencies to move in a measured fashion (divergence indicator) within agreed bands (the parity grid) with respect to the ECU and consequently with each other. Italy and the UK are currently not part of the system. Only Germany and the Benelux are within the current narrow band.

Exercise Notice
A formal notification that the holder of an option wishes to exercise it by buying or selling the underlying stock at the exercise price.

Exercise Price (Strike Price)
The price at which an option may be exercised.

Expiry Date
The last day on which the holder of an option can exercise his right to buy or sell the underlying security.

Exposure
The total amount of money loaned to a borrower or country. Banks set rules to prevent overexposure to any single borrower. In trading operations, it is the potential for running a profit or loss from fluctuations in market prices.