Test 1 Cfa Glossary E

Front 1

economic costs

Back 1

All the remuneration needed to keep a productive resource in its current employment or to acquire the resource for productive use
- the sum of total accounting costs and implicit opportunity costs

Front 2

economic indicator

Back 2

a variable that provides information on the sate of hte overall economy

Front 3

economic loss

Back 3

the amount by which accounting profit is less than normal profit

Front 4

economic order quantity-reorder point (EOQ-ROP)

Back 4

an approach to managing inventory based on expected demand and the predictability of deband
- the ordering point for new inventory is determined based on the costs of ordering and carrying inventory such that the total cost associated with inventory is minimized

Front 5

economic profit

Back 5

equal to accounting profit less the impplicit opportunity cost not included in total accounting costs
- difference between total revenue (TR) and total cost (TC)

Front 6

what is economic profit

Back 6

- abnormal profit
- supernormal profit

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economic rent

Back 7

- the surplus value that results when a particular resource or good is fixed in supply and market price is higher than what is required to bring the resource or good onto the market and sustain its use

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economic stabilization

Back 8

reduction of the magnitude of economic fluctuations

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economic union

Back 9

incorporates all aspects of a common market and in addition requires common economic institution and coordination of economic policies among members

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economics

Back 10

the study of the production, distribution and consumption of goods and services;
the principles of the allocation of scarce resources among competing uses.

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economics of scale

Back 11

reduction in cost per unit resulting from increased production

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effective annual rate

Back 12

the amount by which a unit of currency will grow in a year with interest on interest included

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effective annual yield (EAY)

Back 13

an annualized return that accounts for the effect of interest on interest
- EAY is computed by compounding 1 plus the holding period yield forward to one year, then subtracting 1

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effective convexity

Back 14

a curve convexity statistic that measures the secondary effect of a charge in a benchmark yield curve on a bond's price

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effective duration

Back 15

the sensitivity of a bond's price to a change in a benchmark yield curve

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efficient market

Back 16

a market in which asset prices reflect new information quickly and rationally

Front 17

elastic

Back 17

said of a good or service when the magnitude of elasticity is greater than one

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elasticity

Back 18

the percentage change in one variable for a percent-age change in another variable
- a measure of how sensitive one variable is to a change in the value of another variable

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elasticity of supply

Back 19

a measure of the sensitivity of quantity supplied to aa change in price

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elliott wave theory

Back 20

a technical analysis theory that claims that the market follows regular, repeated waves or cycles

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embedded option

Back 21

contingency provisions that provide the issuer or the bondholders the right, but not the obligation to take action.
these option are not part of the security cannot be traded separately

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empirical probability

Back 22

the probability of an event estimated as a relative frequency of occurrence

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employed

Back 23

the number of people with a job

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endogenous variables

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variables whose equilibrium values are determined within the model being considered

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enterprise value

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a measure of a company's total market value from which the value of cash and short-term investments have been subtracted

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equal weighting

Back 26

an index weighting method in which an equal weight is assigned to each constituent security at inception.

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equilibirum condition

Back 27

a condition necessary for the forces within a system to be in balance

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equipment trust certificates

Back 28

bonds secured by specific types of equipment of physical assets

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equity

Back 29

assets less liabilities, the residual interest in the assets after subtracting the liabilities

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equity forward

Back 30

a contract calling for the purchase of an individual stock, a stock portfolio, or stock index at a later date at a agreed-upon price

Front 31

equity options

Back 31

options on individual stocks

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equity risk premium

Back 32

the expected returned on equities minus the risk-free rate; the premium that investors demand for investing in equities

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equity swap

Back 33

a swap transaction in which at least one cash flow is tied to the return to an equity portfolio position, often an equity index

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equity-linked note

Back 34

type of index linked bond for which the final payment is based on the return of an equity index

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estimate

Back 35

the particular value calculated from sample observations using an estimator

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estimation

Back 36

with reference to statistical inference, the subdivision dealing with estimating the value of a population parameter

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estimator

Back 37

an estimation formula; the formula used to compute the sample mean and other sample statistics are examples of estimators

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eurobonds

Back 38

type of bond issued internationally, outside the jurisdiction of the country in whose currency the bond is denominated

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eurodollar

Back 39

a dollar deposited outside the united states

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european option

Back 40

an option that can only be exercised on its expiration date

Front 41

european-style

Back 41

- said of an option contract that can only be exercised on the option's expiration date

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event

Back 42

any outcome or specified set of outcomes of a random variable

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excess kurtosis

Back 43

degree of peakedness (fatness of tails) in excess of the peakedness of the normal distribution

Front 44

excess supply

Back 44

a condtion in which the quantity ready to be supplied in greater than the quantity demanded

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exchange for physicals (EFP)

Back 45

a permissible delivery procedure used by futures market participants, in which the long and short arrange a delivery procedure other than the normal procedures stipulated by the futures exchange

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exchanges

Back 46

places where traders can meet to arrange their trades

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execution instructions

Back 47

instructions that indicate how to fill an order

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exercise

Back 48

the process of using an option to buy or sell the underlying

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exercise price

Back 49

the fixed price at which an option holder can buy or sell the underlying

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exercise rate

Back 50

the fixed rate at which the holder of an interest rate option can buy or sell the underlying option

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exercise value

Back 51

the value obtained if an option is exercised based on current conditions

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exhaustive

Back 52

covering or containing all possible out comes

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exogenous variables

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variables whose equilibrium values are determined outside the model being considered

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expansion

Back 54

period of a business cycle after its lowest point and before its highest point

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expansionary

Back 55

tending to cause the real economy to grow

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expansionary fiscal policy

Back 56

fiscal policy aimed at achieving real exonomic growth

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expected loss

Back 57

default probability times loss severity given default

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expected value

Back 58

the probability weighted average of the possible outcomes of a random variable

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expenses

Back 59

outflows of economic resources or increase in liabilities that result in decreases in equity (other than decreases because of distributions to owners); reductions in net assets associated with the creation of revenues

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experience curve

Back 60

a curve that shows the direct cost per unit of good or service produced or delivered as typically declining function o fcumultive output

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export subsidy

Back 61

paid by the government to the firmwhen it exports a unit of a good that is beind subsidized

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externality

Back 62

an effect of a market tranactio that is borne by parties other than those who transacted

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extra dividend

Back 63

a dividend paid by a company that doe snot pay pay dividends on a regular schedule, or a dividend that supplements regulr cash dividends with an extra payment