Earnings Yield- This is the inverse of the price/earning ratio and is computed by dividing the earnings per share by the price per share.

 

EBITDA- Estimated by adding depreciation and amortization back to operating income (EBIT).

 

Economic Capital- Economic capital is the amount of capital the bank needs in the case of loss events, covers all risks across a bank, and is essential for the bank to survive in the long term.

 

Edokko Options- Extending on the standard barrier option framework and also the Parisian option framework, a new option was developed to reduce the necessity of intentionally shorting the underlying asset when the option is in-the-money and near to expiry from the perspective of the option writer on a standard barrier option. Because this price manipulation is possible to an extent, Parisian and Parasian options were developed in order to reduce this, but the need for products which further prevent this from happening sparked the development of the Edokko option (also known as the Tokyo option).

 

Effective tax rate- This is the effective tax rate, obtained by dividing the taxes paid by the taxable income as reported to the stockholders. We would rather have used marginal tax rates, but these are not reported.

 

Embedded Options- An embedded option usually provides either the bondholder or the issuer the right to take some action, and include callable bonds and convertible bond.

 

Employment Practices & Workplace Safety- Employment Practices & Workplace Safety under the Basel II Accord include operational risk events such as discrimination, workers compensation, and employee health and safety.

 

Endogenous Liquidity- Endogenous liquidity is the liquidity inherent in the banks' assets themselves.

 

Enterprise Risk Management (ERM)- Enterprise Risk Management is a collection of processes, methods, and other approaches businesses and other organisations use to manage, monitor, and measure risks.

 

Enterprise Value=   Market value of equity + Market value of debt - Cash 

 

Equity- Equity is the capital raised from shareholders plus retained earnings and reflects the ownership interest in a corporation.

 

Equity Capital- Equity capital is capital the bank has raised from shareholders and from its earnings.

 

Equity EVA=   (Return on Equity - Cost of Equity) (BV of Equity)

See descriptions of each of these variables for more detail. We use the cumulated book value of equity for the entire sector.

 

Equity Risk- Equity risk is the potential loss due to an adverse change in the price of stock.

 

Equity Swap- An equity swap, a financial derivative, where the two counterparties exchange at known future dates cash flows based on the absolute or relative performance of an indvidual equity position, an equity portfolio, or index.

 

European Options- European options provide the fundamentals from which other options can be valued. We look at the foundations behind the Black-Scholes model, its pitfalls and how the framework can be applied to valution of exotic options.

 

EVA=  (Return on Capital - Cost of Capital) (BV of Capital)

See descriptions of each of these variables for more detail.

 

Exchange- A (financial) exchange is a formal, organized physical or electronic marketplace where trades between investors follow standardized procedures.

 

Exchange Options- Exchange Options were initially introduced by William 'Dr. Risk' Margrabe in his seminal 1978 paper. These type of options allows the holder of the option to exchange one asset for another and are used commonly in foreign exchange markets, bond markets and stock markets amongst others.

 

Exchange rate- Exchange rate is the price of one country's currency expressed in another country's currency, and is the rate at which one currency can be exchanged for another.

 

Exchange Traded Fund (ETF)- Exchange Traded Fund is a financial instrument that tracks a portfolio, a commodity or an index, and is traded on an exchange.

 

Execution, Delivery & Process Failures- Execution, Delivery & Process Failures under the Basel II Accord include operational risk events such as data entry errors, accounting errors, failed mandatory reporting, and negligent loss of client assets.

 

Exogenous Liquidity- Exogenous liquidity (often called funding liquidity) is the liquidity provided to the bank by its liability structure, including its ability to borrow and obtain contingent lines.

 

Exotic Instrument- An exotic instrument is a financial asset or instrument with features making it more complex than simpler, plain vanilla, products.

 

Expected Loss (EL)- Expected loss describes the size of losses that can be expected to occur.

 

Export Credit Agency (ECA)- Export Credit Agency is a private or quasi-governmental institution that acts as an intermediary between national governments and exporters to issue export financing.

 

Exposure at Default (EAD)- Exposure at default is the maximum loss the lender may suffer in case of a default.

 

Extendible Options- Extendible options are exactly what their name suggests they are; options which can be extended by the holder or writer of the option. These options have become increasingly popular over recent years, particularly for underlyings which are volatile.

 

External Credit Assessment Institution (ECAI)- External Credit Assessment Institution provides credit assessment that banking regulators allow banks to use in computing their regulatory capital requirements.

 

External Data- External data, in terms of operational risk management, relates to operational risk and loss data that is not internal to the organization and is typically accessed through an external database.

 

External Fraud- External Fraud, in the Basel II Accord, includes operational risk events such as the theft of information, hacking damage, third-party theft and forgery.

 

External Liquidity- External liquidity is the noncontractual contingent capital supplied by investors and other institutions to support a bank during times of liquidity stress.

 

Extreme Spread Options- The name extreme spread option might strike you as being a spread option which has some 'extreme' characteristic built in, but in fact, extreme spreads are more a variant of several combined lookback options.

ר רועי פולניצר, MBA ,CRM , FRM הינו הבעלים של שווי פנימי - ייעוץ והדרכהשווי פנימי, רועי פולניצר, ניהול סיכונים, הערכות שווי, Intrinsic Value, Roi Polanitzer, Risk Management, Valuation, VaR, FRM. PRM, CRM. GARP, PRMIA, IARM