What is 'Early Exercise' The exercise of an option prior to its expiration date. Early exercise is only possible with American-style option contracts, which can be exercised at any time up to expiration, as opposed to European...
What is the 'Earnings Multiplier' The earnings multiplier is an adjustment made to a company's P/E ratio that takes into account current interest rates. The earnings multiplier is used to discount future earnings, and allows investors to...
What is an ETF and how does it work
ETFs are exchange traded funds. ETFs are a type of investment fund that hold a basket of securities, such as stocks, bonds, or commodities, and trade on an exchange like a...
What is an earnout and how does it work
An earnout is a performance-based bonus that is paid out over time, typically in addition to a base salary. In order for an earnout to be paid, the employee must meet...
What is 'Economic Exposure'
A type of foreign exchange exposure caused by the effect of unexpected currency fluctuations on a company’s future cash flows. Also known as operating exposure, economic exposure can have a substantial impact on a company’s market...
DefinitionAn economic calendar is used by investors to monitor market-moving events, such as economic indicators and monetary policy decisions. Market-moving events, which are typically announced or released in a report, have a high probability of impacting the financial markets....
What is 'Earned Income' Earned income is income derived from active participation in a trade or business, including wages, salary, tips, commissions and bonuses. This is the opposite of unearned income. Explaining 'Earned Income' Earned...
What is econometrics and what does it involve
Econometrics is the study of relationships between economic variables using statistical methods. It is concerned with the development and application of econometric models to economic data. Econometric models are used to describe...
DefinitionThe efficient-market hypothesis is a theory in financial economics that states that asset prices fully reflect all available information. A direct implication is that it is impossible to "beat the market" consistently on a risk-adjusted basis since market prices...
What is earnings management and why do companies do it
Many publicly traded companies engage in a practice known as earnings management. This is the process of manipulating financial reports in order to meet certain financial targets. While earnings management...