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Treating cash flows as if they occur at the end of a year as opposed to the date convention. Under the end-
of-year convention, the present is time 0, the end of year 1 occurs one year hence, etc.
Endogenous variable
A value determined within the context of a model. Related: Exogenous variable
Endowment funds
Investment funds established for the support of institutions such as colleges, private schools, museums,
hospitals, and foundations. The investment income may be used for the operation of the institution and for
capital expenditures.
Enhanced glossarying
Also called glossarying plus, an glossarying strategy whose objective is to exceed or replicate the total return
performance of some predetermined glossary.
Enhancement
An innovation that has a positive impact on one or more of a firms existing products.
EOE
See: European Options Exchange
EOQ
See: Economic Order Quantity
Equal dollar swap
Used in the context of general equities. Selling common stock/convertibles in one company and reinvesting
the proceeds in as many shares of 1) another type of security issued by the company, or 2) another security
of the same type but of another company -- as can be bought with the proceeds of the sale. See: equal
shares swap.
Equal shares swap
Mainly applies to convertible securities. Selling the underlying common and reinvesting the proceeds in as
much convertible as could be converted into the number of shares of common just sold. See equal dollar
swap.
Equilibrium market price of risk
The slope of the capital market line (C.M.L.). Since the C.M.L. represents the expected return offered to
compensate for a perceived level of risk, each point on the line is a balanced market condition, or
equilibrium. The slope of the line determines the additional expected return needed to compensate for a unit
change in risk. The equation of the C.M.L. is defined by the Capital Asset Pricing Model.
Equilibrium rate of interest
The interest rate that clears the market. Also called the trade-clearing interest rate.
Equipment trust certificates
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