GLOSSARY

List of Financial Terms in alphabetical order:

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Earning Assets Assets that create earnings for a financial institution. Earning assets can typically be loans and securities as they generate interest income for the institution.

Earned Premium The portion of the total policy premium earned by the insurance company that applies to the expired portion of the policy period. See unearned premium.

Earnings Per Share A ratio used to determine the amount of profit generated per share of stock owned. It is determined by dividing net income (minus dividends) by the amount of outstanding common stock (shares).

ECB See European Central Bank

ECML See Electronic Commerce Markup Language

Economic Cycle Recurring periods when the economy moves in and out of recession, recovery and boom phases.

EDGAR (Electronic Data Gathering, Analysis And Retrieval System) U.S. government system for the electronic filing of corporate financial reporting. The system is maintained by the Securities and Exchange Commission (SEC), which requires that all U.S. public companies post their filings on EDGAR. The filings include 10-Ks (annual), 10-Qs (quarterly) and mutual fund prospectuses among other documents.

EDI See Electronic Data Interchange

Efficiency Ratio A measure of how a financial institution is utilizing its' employees, facilities and operations to create profits. The ratio is calculated by taking the non-interest expense and dividing it by the sum of the net interest income and non-interest income. Institutions continually try to lower their efficiency ratio as that will result in higher profits.

Efficiency Ratios See Efficiency Ratio.

EFT See Electronic Funds Transfer

Electronic Commerce Markup Language (ECML) A standard used with electronic wallets for merchant field data collection with electronic purchases on the Internet. The standard allows a merchant to accept input from any ECML enabled wallet and transfers the relevant details, automatically making purchases easier and quicker.

Electronic Data Interchange (EDI) The electronic transmission of data for commercial or administrative transactions using an agreed upon data format and syntax for those transactions. EDI also refers to the electronic exchange of data (e.g., payments, invoices, etc.) between businesses and financial institutions using shared protocols.

Electronic Funds Transfer (EFT) The transfer of funds between accounts electronically, bypassing paper-based methods. The two main categories are wire transfer systems such as FedWire that link banks in the federal reserve system with CHIPS and consumer electronic payment systems.

Electronic Wallet A software application that creates an electronic version of a wallet where customers can store their credit card information for purchases conducted on the Internet. The wallet reduces the number of cumbersome forms customers fill out to make electronic purchases. The most popular forms of wallet use a standard (most commonly ECML) for merchant field data collection and the transfer of details needed for electronic purchases.

Emerging Market stock or bond market in an economically developing country as opposed to markets in the more industrialized countries.

Endorsement An additional document added to a contract that was not part of the original contract that alters the terms or conditions. In insurance, a rider is a type of endorsement on an insurance policy.

Endowment Policy Life insurance that pays the face value of the policy in the case of the policy owner's death during a predetermined period or survival past the end of the period.

Equity Ownership interest held by stockholders in a corporation. In the context of a brokerage account, it refers to the market value of the securities minus debit balance and credit balance.

Equity Swap A type of swap where payments on one or both sides are tied to the price of a specific equity issue or a specific equity index.

Errors and Omissions Liability Insurance A type of insurance policy available to various professions that need protection for negligence or omissions that may result in bodily injury or property damage to a client.

EU See European Union

EUR See Eurotop 100

Euro A common currency initially adopted by 11 European nations to provide for a single stable currency. The European Central Bank oversees the value of the Euro.

Eurobonds Bonds sold simultaneously in a number of countries by an international syndicate. Eurobonds have been issued in many currencies, but the majority of these bonds have been issued in currencies that are actively traded, fully convertible (to other currencies) and relatively stable.

Euroclear One of two main international clearing systems that holds and settles international securities such as Eurobonds. Started in 1968, Euroclear is located in Brussels, Belgium.

European Central Bank (ECB) A bank, based in Brussels, founded to oversee the value and growth of the Euro for the countries that are converting their local currencies to the Euro.

European option Option that can be exercised only on the stated exercise date.

European Union (EU) Economic and political alliance between 15 European countries formed to enhance commerce between its members.

Eurotop 100 (EUR) Benchmark for the performance of the European stock market. It is comprised of the 100 most actively traded shares on the nine largest exchanges in Europe.

Exercise Price The price at which an option buyer may purchase (call option) or sell (put option) the asset upon which the option is written. Also referred to as the strike price.

Expense Ratio A ratio used to analyze the amount paid for operating expenses and management fees by a company. In the insurance industry, the percentage is obtained by dividing the underwriting expenses by net premiums written. It represents the amount used to pay the costs of acquiring, writing and servicing insurance business.

Experience Rated Reinsurance A type of reinsurance where the premiums and commissions are determined using the loss experience of the business over time.

Export Credit Letter of credit in which the Opening Bank is the bank's customer. For example, an exporter in New York is selling to an importer in Malaysia. The importer requests its Malaysian bank to open a letter of credit (import letter of credit). The opening bank is not familiar to the exporter and the exporter requests the transaction pass through a local New York bank. The opening bank then approaches a correspondent bank known to the exporter to process the transaction in New York. To that New York bank, the letter of credit is referred to as an "export credit."

Exposure The term has a number of meanings: 1. The possibility of loss; 2. The possibility of loss due to the risks you are exposed to; 3. In the insurance industry, loss causing peril.

Exposure Unit A unit of measurement that is used in the pricing of insurance.

Extension A term that refers to making advances under a line of credit or changing the time associated with payment on a loan.

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