Economic Capital

The amount of capital necessary to absorb unanticipated or unexpected losses in financial institutions related to various risks such as market, credit and operational risks.

Effective duration

Effective duration is measured by calculating the percentage change in the market value of a callable fixed income security that would result when interest rates change enough to affect cash flow assumptions

End User

Market participant that uses the market makers price.

Equity Linked Notes

An instrument whose return is determined by the performance of a single equity security, a basket of equity securities, or an equity index.

Eurobond

A debt instrument issued in the Euromarket (excluding money market instruments).

Eurobond market

Any Euromarket for longer-term debt instruments (specifically excludes the money markets).

Eurocurrency convention

The yield and day count convention used to quote rates on Eurodollar deposits (LIBOR).

Eurodollar bonds

Dollar-denominated bonds and bond-like instruments issued outside the United States.

European option

An option that can only be exercised during a limited exercise period at the very end of the option's life.

Exchange of borrowings

The simplest form of a currency swap in which each counterparty to the swap obtains funds from third-party borrowings and then exchanges the funds so obtained.

Exchange rate

Also called foreign exchange rate.  The price of one unit of one currency stated in terms of units of another currency.

Exchange-rate risk

The risk that on closing a position, the current exchange rate will be different then the original contract rate.

Exercise Price

Also known as strike price.  The amount that must be paid (or the price that will be received) by an option owner to buy (or sell) the underlying asset from the option writer.

Expiration

The final maturity of an option contract. 

Extendable swap

A fixed-for-floating interest rate swap in which one counterparty has the right to extend the swap beyond its scheduled maturity date.