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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.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Numeric Latest


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... 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... 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... 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 yield",... 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... 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... 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... 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... 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... 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... 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... 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.... 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... 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,... 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... 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... read more

 
EIA

The EIA describes itself as, "The U.S. Energy Information Administration (EIA) collects, analyzes, and disseminates independent and impartial energy information... read more

 
ELASTICITY
  1. The ability to recover an original configuration.

  2. The elasticity of demand or supply refers to the degree to which demand... read more
 
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... read more

 
ELECTRONIC SETTLEMENT
 
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... 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... 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... 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... 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... read more

 
EMBEDDED VALUE

Thi is an insurance term which means the current value of future earnings plus net asset value (NAV). Embedded... read more

 
EME

An exempted micro enterprise (EME) is a small business in South Africa that is exempted from the requirements of the Broad Based Black Economic Empowerment Act... 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).... 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... 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... read more

 
EMPHASIS OF MATTER

An audit opinion which is specifically meant to draw attention to a particular point in the financial results. Listed companies which... 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... 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... 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... 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... 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... 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... 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... 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... 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... 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... read more

 
EQUILIBRIUM

A price region that represents a balance between demand and supply. This is a micro-economics term which suggests that in any free market... read more

 
EQUILIBRIUM MARKET

A price region that represents a balance between demand and supply. This is a micro-economics term which suggests that in any free market... 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... 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... 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... 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... 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... 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... read more

 
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... 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... 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... read more

 
EURODOLLAR
 
EURONEXT

The largest share market in Europe which maintains exchanges in Amsterdam, Paris, London, Dublin, Oslo, Brussels and Lisbon. Euronext has both equity... read more

 
EUROPEAN CENTRAL BANK
The Central Bank for the European Union.
 
EUROPEAN OPTION

An option that can only be executed on its expiration date. As opposed to an American option which can executed at any time up to its expiration... 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... read more

 
EUROSTOXX

The Eurostoxx 50 index is an index (weighted average) of the 50 largest and most liquid shares trading in the Eurozone. It is just... 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... 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... 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... 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... 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... 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... 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... read more

 
EXEMPTED MICRO ENTERPRISE

An exempted micro enterprise (EME) is a small business in South Africa that is exempted from the requirements of the Broad Based Black Economic Empowerment Act... 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... 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.... 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... 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... 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... 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... 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... 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... 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... 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... 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... read more

 
EXPROPRIATION OF LAND

The compulsory taking over of land by the government of a country. In most capitalist... 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... 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... 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