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Letter E

  • Earnings per share

    Earnings per share – calculated as earnings divided by the number of shares. It has more relevance for the shareholder as an estimate of possible dividends.

  • Effective portfolio

    An effective portfolio is every such portfolio having a lower risk than all other portfolios with a comparable (identical) expected return.

  • Eurodollar

    Eurodollars are deposited in the accounts of banks (i.e. dollar claims and deposits), which are non-residential banks from the viewpoint of the US. The result is that a eurodollar is not subject to supervision and regulation in the countries where it is traded. A eurodollar is also not directly dependent on US interest rates, even though, to a certain extent, it is connected to the US banking system and is managed within banks in the same manner as all other currencies. For a transaction to be designated as a eurodollar transaction, the residency of the mediator is the decisive factor, rather than the residency of the primary creditor or of the final debtor. For example, a US citizen lends funds to a bank in London, which in turn lends these funds to the US: this transaction is a eurodollar operation. On the other hand, if funds go via a US bank in New York, this means that we are dealing with a domestic dollar operation. The affect of eurodollar transactions on the banking system is specified below.

  • Euromarket

    A euromarket is a market on which securities and debts are traded, which are denominated in euro currencies. Euro currency markets, of which the eurodollar market is the biggest, were established at the end of the Second World War, when the currencies became convertible and when securities began to be truly traded on an international scale. The preposition “euro” appeared almost accidentally and is rather confusing, as it has no connection to Europe. A market with euro-securities exists in all major financial centres, with London having the biggest share of this trading activity.

  • Exchange rate risk

    The risk of loss of profits as a result of changes in foreign exchange rates in relation to a currency in which accounts are kept.

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