Investing Advice

Definitions of Investing, Legal, & Business Terms

  Investing Term Dictionary
Choose below the first letter of the investment term you would like defined.
Earnings: The profit a company makes after all expenses and taxes. This term is sometimes confused with a company's revenue, which is their total sales. Earnings are equal to a company's sales (after returned merchandise) minus the cost to produce goods for sale or purchase the inventory sold, minus all overhead and taxes.
Earnings per Share: Also known as EPS, this is the company's net profit, after taxes, divided by the number of shares of stock in investor's hands. 
Easement: An agreement providing one individual or business with the right to use land owned by someone else. In the case of real estate trans- actions, long-term easements can affect the value of a property if they interfere with the potential usage of the land. One example of an easement is an agreement between a land-owner and the telephone company to permit the installation of telephone poles on the land.
Economies of Scale: The improvements in a company's operational efficiency as a result of savings from purchasing inventory in volume, the division of labor, and the learning curve. 
80-20 Rule: Business experience that indicates that 80% of a company's revenue will come from just 20% of its total customer base.
Encumbrance: Any agreement involving the use of land that does not prohibit its sale, but which may reduce its value. An easement is one type of encumbrance. Other common encumbrances include liens and mortgages.
Equity: The value of ownership after deducting any amounts owed.
Equity Financing: Raising money by issuing stock, thereby offering part ownership in the company in return for an investment. 
Equities: A fancy name for stocks.
Escrow Money: Assets held by a third party until the conditions of a contract are satisfied, at which time they are paid out.
Estate: A person's total property at the time of their death.
Estoppel: A legal situation barring one individual or business from denying the existence of contracts or agreements when it is clear that a contract exists. Such situations can arise after one individual realizes that the terms of a signed contract is detrimental to his or her business and claims that the contract is invalid. An estoppel comes into play when the court recognizes that the contract exists and prevents the individual from trying to deny its existence as part of a legal suit.
Exchange Rate: The price at which one country's currency can be converted to another currency.
Ex-dividend Date: The date where the owner of the stock on the prior day is entitled to the currently declared dividend to be paid.
Expense Ratio: The percent amount that investors in a mutual fund pay for one year. A fund may sometimes change this amount, which will include any 12b-1 fees. The published figures on a fundís performance have all expenses already deducted.
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