Secured Loans
The process of completing an order to buy or sell securities. Once a trade is
executed, it is reported by a Confirmation Report; settlement (payment and
transfer of ownership) occurs in the U.S. between 1 (mutual funds) and 5 (stocks)
days after an order is executed. Settlement times for exchange listed stocks are
in the process of being reduced to three days in the U. S. The time greatly varies
across countries. For example, in France, settlements are only once per month.
Execution costs
The difference between the execution price of a security and the price that would
have existed in the absence of a trade, which can be further divided into market
impact costs and market timing costs.
Exempt securities
Instrument exempt from the registration requirements of the Securities Act of
1933 or the margin requirements of the S.E.C. Act of 1934. Such securities
include government bonds, agencies, munis, commercial paper, and private
placements.
Exercise
To implement the right of the holder of an option to buy (in the case of a call) or
sell (in the case of a put) the underlying security.
Exercise price
The price at which the security underlying a future or options contract may be
bought or sold.
Exercise value
The amount of advantage over a current market transaction provided by an in-
the-money option.
Exercising the option
The act buying or selling the underlying asset via the option contract.
Exogenous variable
A variable whose value is determined outside the model in which it is used.
Related: Endogenous variable
Expectations hypothesis theories
