List of Glossary Terms
The PDSnet Glossary of Terms contains definitions and explanations for over 2600 financial market terms. These definitions are constantly kept up-to-date with current topical examples from the markets. They are also updated for changes in legislation and current events like COVID19 and the July 2021 civil unrest.
The terms in the Glossary are directly linked to all PDSnet articles, confidential reports, lecture modules and other material. This means that a client reading one of our publications can immediately see which terms are defined in the Glossary and click through to read the definition. Terms within the definitions in the glossary are similarly linked, which gives the Glossary an enormous educational depth share market investors.
| EAO |
This is an order handed down by a court in terms of which an amount may be deducted from an employee's income for the repayment of a creditor. Thousands of salary-earners have EAOs against their... read more |
| EARLY ENTRY |
A large price movement in one direction within the first 15 minutes after the open of the daily session. |
| EARMARKING |
The setting aside of funds by an organisation or individual for a specific purpose. In the context of government expenditure, funds collected from a specific source... read more |
| EARNINGS |
The earnings of a company are its profits. They are calculated by deducting the expenses of a period from the incomes of the same period.... read more |
| EARNINGS BEFORE INTEREST AND TAXATION |
This earnings figure, better known as EBIT, shows the company's earnings before the cost of interest-bearing debt and taxation. It... read more |
| EARNINGS BEFORE INTEREST, TAXATION, DEPRECIATION AND AMORTISATION |
This is shortened to EBITDA and it shows the company's profits before non-operational costs. This allows investors to see the company's operating performance. Some companies... read more |
| EARNINGS ESTIMATES |
The estimated earnings projected for a company for a fiscal year. Estimating future earnings is an art. It depends on both internal factors within the company such as working capital management,... read more |
| EARNINGS MULTIPLE |
The market price of a share divided by its most recent average annual earnings per share. This gives the reciprocal of the "earnings... read more |
| EARNINGS PER SHARE |
A company's earnings (profit) divided by the number of ordinary shares usually expressed as a number of cents per share. The earnings per share (EPS) includes all the companies... read more |
| EARNINGS YIELD |
Earnings per share expressed as a percentage of the current market price of the share. For example, a company with 25 cents earnings... read more |
| EBIT |
This earnings figure, better known as EBIT, shows the company's earnings before the cost of interest-bearing debt and taxation. It... read more |
| EBITDA |
This is shortened to EBITDA and it shows the company's profits before non-operational costs. This allows investors to see the company's operating performance. Some companies... read more |
| ECB |
The Central Bank for the European Union. |
| ECONOMETRICS |
This is the application of statistics and probability to economic data. Like all social sciences, economics is measuring the behaviour of people and developing rules based on their behavioural... read more |
| ECONOMIC CONTRACTION |
A cyclical period of lower economic activity, occurring at regular intervals; as opposed to a depression, which is a period of major economic downturn with high unemployment... read more |
| ECONOMIC GROWTH |
In the context of economics, this refers to the increase in a country's gross domestic product (GDP). GDP growth is impacted by many things, but mainly... read more |
| ECONOMIC INDEX |
Every week there are a variety of economic indicators which are published. The Business Day runs a special column on Mondays explaining which indicators are going to be published that week and... read more |
| ECONOMIC INDICATORS |
Every week there are a variety of economic indicators which are published. The Business Day runs a special column on Mondays explaining which indicators are going to be published that week and... read more |
| ECONOMIC SANCTIONS |
Economic penalties which are imposed on one country, organisation or individual by one or more countries with the objective of getting that country, organisation or individual to change their... read more |
| ECONOMIC STIMULUS |
A mechanism to encourage economic activity within the economy. The Monetary Policy Committee (MPC) meets every two months to decide whether to reduce... read more |
| ECONOMICS |
The study of the allocation of scarce resources within a country and between countries. Economics is a social science because it looks at human behaviour... read more |
| ECONOMIES OF SCALE |
Achieving economies of scale is the objective of every manufacturing business, because it substantially reduces costs and increases profitability. There is a distinct advantage to size in manufacturing,... read more |
| ECONOMY |
The economy of a country is the aggregate of all economic activity within that country. It is measured in various ways to determine whether it is growing or shrinking.... read more |
| EESE |
The Equities Express Securities Exchange (EESE) was the fifth stock exchange to register in South Africa and it only does primary listings. It is mainly focused on BEE shares offered by companies... read more |
| EFFECTIVE INTEREST RATE |
The interest coupon on a bond expressed as a percentage of its current price. Thus, a R1m bond with a coupon of 10% would earn R100 000 per annum, but if the price of the bond falls to R900 000... read more |
| EFFECTIVE TAXATION RATE |
This is the percentage of its taxable income that a company pays to the Receiver. The Income Tax Act allows companies to deduct certain initial and investment allowances when they purchase... read more |
| EFFICIENT MARKET |
The basis of modern portfolio theory, the efficient market hypothesis, maintains that all information is already discounted by the market and reflected in share prices due to market participants... read more |
| EFFICIENT MARKET THEORY |
The basis of modern portfolio theory, the efficient market hypothesis, maintains that all information is already discounted by the market and reflected in share prices due to market participants... read more |
| EIA |
The EIA describes itself as, "The U.S. Energy Information Administration (EIA) collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking,... read more |
| ELASTICITY |
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| ELECTRONIC ORDER |
An order placed electronically (without the use of a broker) either via the Internet or an electronic trading system. |
| ELECTRONIC SCRIP REGISTER |
After dematerialisation in South Africa, physical share certificates were replaced by an electronic record and share registers were replaced by an electronic scrip register. Obviously, the electronic... read more |
| ELECTRONIC SETTLEMENT |
Settlement of securities transactions on a T+3 rolling contractual settlement cycle through STRATE, the electronic settlement system. |
| ELECTRONIC TRADING HOURS |
The U.S. after-hours markets during the evenings. Futures contracts trading during ETH do so on electronic trade matching platforms such as Globex or A/C/E. |
| ELECTRONIC TRADING SYSTEMS |
Systems that allow participating exchanges to list their products for trading after the close of the exchange's open outcry trading hours (i.e., Chicago Board of Trade's A/C/E, Chicago Mercantile... read more |
| ELLIOT IMPULSE WAVE |
The strong moves in Elliot Wave theory which move in the direction of the larger degree wave. In Elliot Wave theory there ware two types of waves: impulse and corrective. Impulse waves are the... read more |
| ELLIOTT WAVE |
A pattern-recognition technique published by Ralph Nelson Elliott in 1939, which holds that the stock market follows a rhythm or pattern of five waves up and three waves down to form a complete... read more |
| ELLIOTT WAVE THEORY |
A pattern-recognition technique published by Ralph Nelson Elliott in 1939, which holds that the stock market follows a rhythm or pattern of five waves up and three waves down to form a complete... read more |
| EMBEDDED DERIVATIVE |
This is a derivatives contract that is made part of a commercial agreement. The idea is that the derivative contract only comes into play if and when, certain conditions are met. The objective... read more |
| EMBEDDED VALUE |
Thi is an insurance term which means the current value of future earnings plus net asset value (NAV). Embedded value approximates the value of the shareholder's interest in the company - and... read more |
| EME |
An exempted micro enterprise (EME) is a small business in South Africa that is exmpted from the requirements of the Broad Based Balck Economic Empowerment Act (53 of 2003) because of its small... read more |
| EMERGING MARKET |
An economy which is in a development phase - as opposed to a first-world economy which is said to be fully developed. Emerging economies generally... read more |
| EMERGING MARKETS INDEX |
An average index of the stock markets of emerging economies produced and maintained by Morgan Stanley Capital International (MSCI). It is weighted 40,95% China, 12,28% Taiwan, 11,61% Korea, 8,02%... read more |
| EMISSIONS |
Those gaseous emissions which contribute to global warming and climate change by trapping solar energy inside the atmosphere. The burning of fossil fuels is the main contributor to these emissions.... read more |
| EMOLUMENTS ATTACHMENTS ORDER |
This is an order handed down by a court in terms of which an amount may be deducted from an employee's income for the repayment of a creditor. Thousands of salary-earners have EAOs against their... read more |
| EMPHASIS OF MATTER |
An audit opinion which is specifically meant to draw attention to a particular point in the financials. Listed companies which have an emphasis of matter are marked with the letter "E" by the... read more |
| EMPLOYEE |
A person who exchanges their time and skill for a salary or wage. Labour is one of the four factors of production and every adult can engage in employment to earn their living. The more highly... read more |
| EMPLOYEE SHARE INCENTIVE SCHEME |
Most listed companies use their shares to motivate their employees through an employee share option scheme. This usually involves the employee getting options to buy a certain quantity of shares... read more |
| EMPLOYMENT EQUITY ACT |
This Act is aimed at redressing the wrongs of the Apartheid era and ensuring that employment is not racially based. It does this by trying to ensure that companies above a certain size (with... read more |
| EMPLOYMENT TAX INCENTIVE ACT |
An Act designed to incentivise employers to employ young people in the economy. The Employment Tax Incentive Act (26 of 2013), which is also called the Youth Employment Tax Incentive,... read more |
| ENCUMBERED |
The word "encumbered" is applied to assets which are bonded or otherwise used as security to cover a loan. |
| END OF DAY PRICE |
This is the closing price of a share at the end of the trading day. Most software available to private investors makes use of end of day data. The JSE provides... read more |
| ENDOWMENT |
An endowment insurance policy is a type of savings/investment. A pure endowment offers no risk or term insurance. The problem with these policies is that they generally give a very low return... read more |
| ENERGY INFORMATION ADMINISTRATION (EIA) |
The EIA describes itself as, "The U.S. Energy Information Administration (EIA) collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking,... read more |
| ENGULFING GREEN |
A bottom candlestick reversal signal, this is a two candlestick pattern consisting of a large green candle enveloping a preceding red candle. This pattern implies that the trend... read more |
| ENGULFING PATTERN |
In candlestick terminology, a multiple candlestick line pattern; a major reversal signal with two opposing-color real bodies making up the pattern (also referred to as a tsutsumi). An engulfing... read more |
| ENTREPRENEUR |
This is a "go-getter" who establishes and runs a business for his own account and shares in the risks and profits. |
| ENTRY |
The point at which a trader gets into a position in the market. |
| ENTRY THRESHOLD |
This is the cost of establishing a new business in a particular industry. Some industries require a considerable capital investment to be viable and so have a high entry threshold. For example,... read more |
| ENVELOPE |
Lines surrounding an index or indicator - also called trading bands. For example Bollinger Bands. |
| EPS |
A company's earnings (profit) divided by the number of ordinary shares usually expressed as a number of cents per share. The earnings per share (EPS) includes all the companies... read more |
| EQUILIBRIUM |
A price region that represents a balance between demand and supply. This is a microeconomics term which suggests that in any free market supply and demand are opposing forces which reach a balance... read more |
| EQUILIBRIUM MARKET |
A price region that represents a balance between demand and supply. This is a microeconomics term which suggests that in any free market supply and demand are opposing forces which reach a balance... read more |
| EQUITY |
That portion of share capital which carries risk, and shares in profits through dividends that are dependent on profitability.... read more |
| EQUITY ACCOUNTING |
When a company owns more than 20% of another company, then in terms of IAS 28, that company is an associate company and it must be valued at its cost plus any increase in net asset value. Investments... read more |
| EQUITY EXPRESS SECURITIES EXCHANGE |
The Equities Express Securities Exchange (EESE) was the fifth stock exchange to register in South Africa and it only does primary listings. It is mainly focused on BEE shares offered by companies... read more |
| EQUITY INVESTOR |
A natural person (rather than a corporate entity) who invests on the stock market either directly or indirectly. Private investors make up... read more |
| EQUITY SHARE |
Also sometimes called "equity" shares, these shares share in the profits and risks of the company. Unlike the fixed dividend paid to preference shareholders, the ordinary dividend is decided... read more |
| EQUIVOLUME CHART |
Created by Richard W. Arms in 1963, a chart in which the vertical axis is the high-low range for each day, while the horizontal axis represents the volume of shares of stock or the number of... read more |
| ESCROW |
An escrow account is one which is under the control of a third party (usually an attorney) who then determines when the funds can be released for payment based on specified conditions. Escrow... read more |
| ESTATE DUTY |
A tax on a deceased estate. In South Africa, estate duty is 20% on the first R30m of an estate and then 25% on any amount above that. |
| ESTIMATED EPS CHANGE |
Change in estimated mean earnings per share for the current fiscal year from the last month, last three months and last six months to the current month. |
| ETF |
Collections of securities that are bought and sold as a package on an exchange. Essentially, buying an ETF means tracking a group or "basket" of... read more |
| ETN |
A debt security traded on a stock exchange. An exchange trade note (ETN) is similar to an exchange traded fund (ETF) in that they both track underlying assets and both are traded on a stock exchange... read more |
| EURIBOR |
This is abreviated to "euribor" and it is an interest rate which is based on the average rates for unsecured funds at European banks. It is Europe's equivalent of the London interbank offer rate... read more |
| EURO INTERBANK OFFERED RATE |
This is abreviated to "euribor" and it is an interest rate which is based on the average rates for unsecured funds at European banks. It is Europe's equivalent of the London interbank offer rate... read more |
| EURODOLLAR |
Dollars deposited in foreign banks, with the futures contract reflecting the rates offered between London branches of top US banks and foreign banks. |
| EURONEXT |
The largest share market in Europe which maintains exchanges in Amsterdam, Paris, London, Dublin, Oslo, Brussels and Lisbon. Euronext has both equity and derviative markets as well as bond and... read more |
| EUROPEAN CENTRAL BANK |
The Central Bank for the European Union. |
| EUROPEAN OPTION |
... read more |
| EUROPEAN UNION (EU) |
The principal goal of the EU has been to establish a single European currency called the Euro, to officially replace the national currencies of the member EU countries. On January 1, 1999,... read more |
| EUROSTOXX |
The Eurostoxx 50 index is an index (weighted average) of the 50 largest and most liquid stocks trading in the Eurozone. It is just one of the indexes offered by Stoxx - which is owned by the... read more |
| EVASION |
A criminal offence committed by someone who does not declare their tax position correctly in their tax return, thereby defrauding The Receiver of of Revenue of taxes due. Evasion differs from... read more |
| EVENING STAR |
A candlestick formation which is the bearish counterpart of the morning star pattern; a top reversal, it should be acted on if it arises after an uptrend. The morning star and evening star formations... read more |
| EX OFFICIO DIRECTOR |
This is a person who is deemed to be a director by virtue of his office or function within an organisation. Section 66 (4) (a) (ii) of the Companies Act (71 of 2008) states: "a person to be an... read more |
| EX-DIV |
A share is "ex div" once the last day to trade has passed. Any sales after the last day to trade are done on the basis that the dividend accrues... read more |
| EX-DIVIDEND DATE |
The day on which the right to receive a current dividend is not automatically transferred to a buyer. This is usually the Monday after the last day to register for the dividend. On this day the... read more |
| EXCHANGE |
A securities exchange that is properly formulated and run in accordance with an Act of Parliament. The Johannesburg Securities Exchange (JSE) is... read more |
| EXCHANGE CONTROL |
This is a set of rules and limitations placed on the trade in foreign currencies. The normal objective of exchange control is to enable the government to stabilise the flow of funds into and... read more |
| EXCHANGE RATE |
An exchange rate is the rate at which one currency can be traded for another. Thus, for example, the rand trades against the US dollar at rates which fluctuate... read more |
| EXCHANGE TRADED FUND |
Collections of securities that are bought and sold as a package on an exchange. Essentially, buying an ETF means tracking a group or "basket" of... read more |
| EXCHANGE TRADED NOTE |
A debt security traded on a stock exchange. An exchange trade note (ETN) is similar to an exchange traded fund (ETF) in that they both track underlying assets and both are traded on a stock exchange... read more |
| EXEMPT INCOME |
In terms of the Income Tax Act natural persons (i.e. not corporate entities) do not have to pay tax on interest income from a South African source up to R23800 per annum (and R34500 for people... read more |
| EXEMPT SUPPLIES |
South Africa has Value Added Tax of 15% which is levied on all products except for what are known as "exempt supplies" - which include education, after-care for children, rentals, and certain... read more |
| EXEMPTED MICRO ENTERPRISE |
An exempted micro enterprise (EME) is a small business in South Africa that is exmpted from the requirements of the Broad Based Balck Economic Empowerment Act (53 of 2003) because of its small... read more |
| EXERCISE |
The process by which the holder of an option makes or receives delivery of shares of the underlying security. |
| EXHAUSTION GAP |
When a share's price has been rising for some time and quickly, it will sometimes have a day where the lowest price is far above the previous day's high price - this shows on the chart as a gap... read more |
| EXIT |
The point at which a trader closes out of a trade. |
| EXPANSIONARY POLICY |
A policy of the Reserve Bank's Monetary Policy Committee (MPC) to stimulate the economy by reducing interest rates and other expansionary monetary policies such as buying back government bonds... read more |
| EXPENDITURE |
This is an economics term which refers to the total expenditure within the economy. It is a method of calculating gross domestic product. The formula is: Gross Domestic Product = Consumer... read more |
| EXPENSE |
This something which a company has to pay for. Companies have two types of expenses - those which go up and down with sales and those which have to be paid even if there are no sales.... read more |
| EXPENSE RATIO |
This is a ratio used in the insurance industry to establish the direct costs associated with acquiring, servicing and underwriting the premiums earned by the company. These costs could include... read more |
| EXPENSIVE |
A term used by analysts and investors to describe a share which is trading above what they perceive to be its real value. Obviously, this... read more |
| EXPIRATION DATE |
Generally the last date on which an option may be exercised. It is not uncommon for an option to expire on a specified date during the month prior to the delivery month for the underlying futures... read more |
| EXPONENTIAL MOVING AVERAGE |
An exponential moving average (EMA) is one in which the latest prices in the moving average are weighted much more heavily than the oldest prices. The weighting varies over the period of the... read more |
| EXPONENTIAL SMOOTHING |
A mathematical-statistical method of forecasting that assumes future price action is a weighted average of past periods; a mathematic series in which greater weight is given to more recent price... read more |
| EXPONENTIAL WEIGHTING |
Moving averages are the most basic form of line chart in technical analysis. They are more commonly used in conjunction with other indicators than as indicators in their own right. One of the... read more |
| EXPORT |
The sale of products produced locally in foreign markets generating an inflow of foreign currency. The value of a country's imports is subtracted... read more |
| EXPORT LED |
A term used by economists to explain the fact that economic booms in South Africa are generally caused by a strong recovery in commodity exports and prices. This is because... read more |
| EXPOSED |
The degree to which a portfolio or other investment is susceptible to risk from certain factors. For example, a share in a company whose main business is importing would be highly "exposed" to... read more |
| EXPOSURE |
The degree to which a portfolio or other investment is susceptible to risk from certain factors. For example, a share in a company whose main business is importing would be highly "exposed" to... read more |
| EXPRESSION OF INTEREST |
An expression of interest (EOI) is an approach by an acquisitive company which seeks to acquire another company. They would first send an EOI - and then engage in discussions with the target... read more |
| EXPROPRIATION OF LAND |
The compulsory taking over of land by the government of a country. In most capitalist countries the right... read more |
| EXTRAORDINARY ITEM |
An Income Statement item which shows an expense or income which is not part of the company's normal business. For example, if a supermarket chain sells a piece of land and makes a profit, then... read more |
| EXTREME POVERTY |
The worst level of poverty defined by the World Bank as an income per person of less than $1.25 per day. About one fifth of people living in developing countries are in extreme poverty... read more |
| EY |
Earnings per share expressed as a percentage of the current market price of the share. For example, a company with 25 cents earnings... read more |