See: Interest

Ex-All
A purchase of a stock while it is trading without dividends, rights, warrants, or any other privileges connected with that stock.

See: Ex-Dividend; Ex-Rights; Ex-Warrants

Excess Margin
Equity in a customer's margin account at a brokerage firm that is above the Regulation T minimum or the New York Stock Exchange maintenance requirement. With a Regulation T margin requirement of $50,000 and an exchange maintenance requirement of $25,000, for example, the customer whose equity is $100,000 would have excess margin of 50,000 and 75,000, respectively.

See: Margin; Margin Account; Margin Requirement; Minimum Maintenance Requirement

Excess Profits Tax
Additional federal taxes levied on business earnings. The purpose of the tax is to increase national revenues during a time of national emergencies.

Exchange Distribution
Block trade completed on an exchange floor. An investor who wishes to sell a large block of stock in one transaction will request a broker to solicit and group orders. The seller sells the securities to the buyers all at the same time, and the trade is announced on the broad tape as an exchange distribution. The seller pays a special commission to the executing broker.

See: Broad Tape

Exchange for Physical Program (EFP)
A trading technique involving index futures and the stocks composing the index. Complex computer programs show deviations in the spread between the futures and the stocks. The trader attempts to profit through arbitrage--buying the index future and selling the stocks short, or vice versa. As the spread returns to its norm, the positions are closed out at a profit.

See: Arbitrage; Index; Index Arbitrage

Exchange Privilege
A mutual fund feature that allows a shareholder to convert from one fund to another fund within the same mutual fund family. For example, in a bull market an investor placed their money in an aggressive growth fund. If they expected the market to take a downturn, an exchange privilege would allow them to move the money to a conservative fund such as a money market. Mutual funds do not usually charge when an investor takes advantage of an exchange privilege. However, some funds do have specific parameters as to when or how many times an investor may use the exchange privileges.

See: Mutual Fund "Family"

Exchange Rate
Price at which the currency of a particular country can be converted into another country's currency. Exchange rates usually vary slightly each day and are influenced by a wide range of economic factors.

Ex-Dividend
A synonym for "without dividend," it is the time period between a dividend announcement and payment during which an investor who buys the stock's shares is not entitled to receive the dividend. For example, a dividend may be declared as payable to holders of record on the company's books on a given Friday (the record date). The New York Stock Exchange would declare the stock "ex-dividend" as of the opening of the market on the preceding Wednesday (two business days prior to the record date). Therefore, an investor who buys the stock on or after that Wednesday is not be entitled to that dividend.

It is common for a stock's price to increase by the dividend amount as the ex-dividend date gets closer. It then usually drops by the dividend amount after the ex-dividend date. A stock that is ex-dividend is marked with an "x" in the stock table listings in newspapers.

See: Cum-Dividend; Dividend; Dividend Record

Execution
Securities term to used to indicate that a buy or sell order has been completed.

See: Erroneous Report Rule; Orders; Trade; Transaction

Executor
Any individual(s) appointed in a will, and confirmed by the court to administrate and distribute assets within the decedent's estate.

See: Estate Tax

Exempt Accounts
A NYSE term used to describe a customer who is not subject to exchange margin rules for US government issues and mortgage-backed securities. The customers may be individuals who have at least $16 million net tangible assets, broker-dealers and entities that are regulated by the US government or any of its agencies, states or municipalities.

See: Margin

Exempt Securities
Securities that are not subject to the registration requirements of the Securities Act of 1933. Exempt securities also include securities that do not have to follow certain provisions of the Securities Exchange Act of 1934 in terms of margin, registration of dealers who make a market in them, and certain reporting requirements. Examples of exempt securities are municipal bonds, governments and bank securities.

See: Securities Exchange Act of 1933; Securities Exchange Act of 1934

Exempt Transaction
A security transaction that is excluded from registration requirements.

Exercise
In options trading, the holder of a long contract has the right to buy (call option) or sell (put option) the underlying shares at the exercise price by notifying the option seller (writer). In making notification to the seller, the holder is exercising the option contract.

See: Exercise Limit; Exercise Notice; Exercise Price; Options

Exercise Limit
Maximum number of option contracts of the same class that can be exercised within five consecutive business days. Stock options usually have an exercise limit of 2000 contracts.

See: Class Of Option; Exercise

Exercise Notice
Notification by a broker that a client who holds a long option wants to exercise a right to buy (if call) or sell (if put) the underlying stock in an option contract. The notice is sent to the Options Clearing Corporation (OCC) which in return notifies the option seller (writer) to make sure that the stock is delivered.

See: Class Of Option; Exercise; Options; Options Clearing Corporation

Exercise Price
Dollar value per share at which the underlying security in a long option contract can be exercised over the specified period. If it is a call option, when exercising, the underlying security is bought, and if it is a put option, it is sold. The holder of 1 ABC January 65 put, for example, can exercise the contract before January's expiration date. Thus, when exercising the contract, the holder sells 100 shares of ABC at the exercise or strike price of $65.

See: Exercise; Strike Price

EXIM (Export-Import Bank)
A bank that facilitates US trade with foreign countries by providing financing for exports and imports. It borrows money from the US Treasury and is backed by the full faith and credit of the US Government.

Exit Fee
Mutual fund lingo used when a penalty (in cents per share) is charged to investors who redeem their investment within the fund's first few years of operation. Not to be confused with a back-end load.

See: Back-End Load; Mutual Fund

Expense
In accounting, a disbursement against revenue in the period incurred. The expenditure reduces income.

See: Disbursement

Expense Ratio
Charge, stated as a percentage of total investment, that shareholders pay for a mutual fund's operating expenses, management fees and other overhead expenses. The money is withheld from the fund's current income and is not an out-of-pocket cost to the investor. It is normally disclosed in the fund's annual report to shareholders.

See: Expense; Management Fee

Ex-Legal
Situation in which a municipal bond does not have a legal opinion printed on it. Buyers of these bonds must be forewarned that there is not a legal opinion.

See: Legal Opinion; Qualified Legal Opinion

Expiration
The last day on which an option can be exercised. If it is not, the option is said to have "expired worthless."

See: Expiration Cycle; Expiration Date

Expiration Cycle
Cycles used to designate expiration dates in options trading. Corporations and indexes that have options trading are assigned a specific cycle to follow. There are three cycles: 1: January, April, July, October; 2: February, May, August, November; 3: March June September, December. Only three of the four months in a set are traded at one time. For example, when February options expire, trading in November options will begin.

See: Expiration; Expiration Date; Options

Expiration Date
The date on which an option expires. In most cases, an options expiration date is on the Saturday immediately following the third Friday of the expiration month. However, the last day the option can be traded is the third Friday of the expiration month.

See: Expiration; Expiration Cycle; Options

Export-Import Bank (EXIM)
A bank that facilitates US trade with foreign countries by providing financing for exports and imports. It borrows money from the US Treasury and is backed by the full faith and credit of the US Government.

Ex-Rights
Brokerage lingo meaning "without rights." During a rights offering, if the common stock is purchased on or after the ex-rights date (four business days prior to the record date), the investor does not receive rights that enable an investor to buy the company's common stock at a discount from the prevailing market price. As a rule, after the ex-rights date, the rights will trade separately from the common stock.

See: Ex-All; Record Date; Right

External Funds
Outside funds infused into a corporation to supplement the firm's cash flow. They are used for expansion and working capital needs. The external funds can originate from a bank loan, a bond offering, or from venture capitalists.

See: Venture Capital; Working Capital

Extra Dividend
A stock or cash dividend paid to shareholders. It is in addition to the company's regular dividend. An extra dividend may be paid by a company after an especially profitable year to reward its shareholders.

See: Dividend

Extraordinary Item
An irregular event, such as a division write-off or acquisition of another company, that needs to be explained to shareholders in an annual or quarterly report. Earnings will normally be calculated and reported before the effect and after the effect of extraordinary items.

See: Write-Off

Ex-Warrants
Brokerage lingo meaning "without warrants." An investor who buys a stock that is ex-warrants are not entitled to the stock's warrants. An investor, for example, who buys a stock on April 25 that has gone ex-warrants on April 23, will not be entitled to receive those warrants. The warrants belong to the shareholder of record on April 23. Warrants permit the holder to buy stock at a specified price at a future date.