E

Question 1

Earned Income

Answer 1

Income that is designated by Canada 
Revenue Agency for RRSP calculations. 
Most types of revenues are included with 
the exception of any form of investment 
income and pension income.

Question 2

Earnings Per Share (EPS)

Answer 2

A value ratio that shows the portion of net
income for a period attributable to a single
common share of a company. For example,
a company with $100 million in earnings
and with 100 million common shareholders
would report an EPS of $1 per share.

Question 3

Economic Indicators

Answer 3

Statistics or data series that are used to
analyze business conditions and current
economic activity. See also leading,
lagging, and coincident indicators.

Question 4

Economies of Scale

Answer 4

An economic principle whereby the per
unit cost of producing each unit of output
falls as the volume of production increases.
Typically, a company that achieves
economies of scale lowers the average cost
per unit through increased production since
fixed costs are shared over an increased
number of goods.

Question 5

Efficient Market Hypothesis

Answer 5

The theory that a stock’s price reflects all
available information and reflects its true
value.

Question 6

Election Period

Answer 6

When an investor purchases an extendible
or retractable bond, they have a time
period in which to notify the company if
they want to exercise the option.

Question 7

Elliot Wave Theory

Answer 7

A theory used in technical analysis based
on the rhythms found in nature. The theory
states that there are repetitive, predictable
sequences of numbers and cycles found in
nature similar to patterns of stock
movements

Question 8

Emerging Industries

Answer 8

Brand new industries in the early stages of
growth. Often considered as speculative
because they are introducing new products
that may or may not be accepted and may
face strong competition from other new
entrants.

Question 9

Equilibrium Price

Answer 9

The price at which the quantity demanded

equals the quantity supplied.

Question 10

Equipment Trust Certifi cate

Answer 10

A type of debt security that was historically
used to finance “rolling stock” or railway
boxcars. The cars were the collateral behind
the issue and when the issue was paid down
the cars reverted to the issuer. In recent
times, equipment trusts are used as a
method of financing containers for the
offshore industry. A security, more common
in the U.S. than in Canada.

Question 11

Equity

Answer 11

Ownership interest in a corporation’s stock
that represents a claim on its revenue and
assets. See also Stock.

Question 12

Equity Accounting Method

Answer 12

An accounting method used to determine
income derived from a company’s
investment in another company over which
it exerts significant influence.

Question 13

Escrowed Shares

Answer 13

Outstanding shares of a company which,
while entitled to vote and receive dividends,
may not be bought or sold unless special
approval is obtained. Mining and oil
companies commonly use this technique
when treasury shares are issued for new
properties. Shares can be released from
escrow (i.e., freed to be bought and sold)
only with the permission of applicable
authorities such as a stock exchange and/or
securities commission

Question 14

Eurobonds

Answer 14

Bonds that are issued and sold outside a
domestic market and typically denominated
in a currency other than that of the domestic
market. For example, a bond denominated
in Canadian dollars and issued in Germany
would be classifi ed as a Eurobond

Question 15

European-Style Option

Answer 15

An option that can only be exercised on a
specified date – normally the business day
prior to expiration.

Question 16

Event-Driven Hedge Funds

Answer 16

A type of hedge fund that seeks to profit
from unique events such as mergers,
acquisitions, stock splits or buybacks.

Question 17

Ex-Ante

Answer 17

A projection of expected returns – what

investors expect to realize as a return.

Question 18

Exchange Fund Account

Answer 18

A special federal government account 
operated by the Bank of Canada to hold 
and conduct transactions in Canada’s 
foreign exchange reserves on instructions 
from the Minister of Finance.

Question 19

Exchange Rate

Answer 19

The price at which one currency exchanges

for another.

Question 20

Exchange-Traded Funds (ETFs)

Answer 20

Open-ended mutual fund trusts that hold
the same stocks in the same proportion as
those included in a specific stock index.
Shares of an exchange-traded fund trade on
major stock exchanges. Like index mutual
funds, ETFs are designed to mimic the
performance of a specified index by
investing in the constituent companies included in that index. Like the stocks in
which they invest, shares can be traded
throughout the trading day.

Question 21

Ex-Dividend

Answer 21

A term that denotes that when a person 
purchases a common or preferred share, 
they are not entitled to the dividend 
payment. Shares go ex-dividend two 
business days prior to the shareholder 
record date. See also Cum Dividend.

Question 22

Exempt List

Answer 22

Large professional buyers of securities,
mostly financial institutions, that are
offered a portion of a new issue by one
member of the banking group on behalf of
the whole syndicate. The term exempt
indicates that this group of investors is
exempt from receiving a prospectus on a
new issue as they are considered to be
sophisticated and knowledgeable.

Question 23

Exercise

Answer 23

The process of invoking the rights of the
option or warrant contract. It is the holder
of the option who exercises his or her
rights. See also Assignment.

Question 24

Exercise Price

Answer 24

The price at which a derivative can be
exchanged for a share of the underlying
security (also known as subscription price).
For an option, it is the price at which the
underlying security can be purchased, in
the case of a call, or sold, in the case of a
put, by the option holder. Synonymous
with strike price.

Question 25

Expansion

Answer 25

A phase of the business cycle characterized
by increasing corporate profits and hence
increasing share prices, an increase in the
demand for capital for business expansion,
and hence an increase in interest rates.

Question 26

Expectations Theory

Answer 26

A theory stating that the yield curve is
shaped by a market consensus about future
interest rates.

Question 27

Expiration Date

Answer 27

The date on which certain rights or option
contracts cease to exist. For equity options,
this date is usually the Saturday following
the third Friday of the month listed in the
contract. This term can also be used to
describe the day on which warrants and
rights cease to exist.

Question 28

Ex-Post

Answer 28

The rate of return that was actually
received. This historic data is used to
measure actual performance.

Question 29

Ex-Rights

Answer 29

A term that denotes that the purchaser of a
common share would not be entitled to a
rights offering. Common shares go ex-rights
two business days prior to the shareholder
of record date.

Question 30

Extendible Bond or Debenture

Answer 30

A bond or debenture with terms granting
the holder the option to extend the maturity
date by a specified number of years.

Question 31

Extension Date

Answer 31

For extendible bonds the maturity date of
the bond can be extended so that the bond
changes from a short-term bond to a long-
term bond.