Stock Markets Glossary - Letter E

Employee Stock Options - Employee Stock Options are a popular way for employers to compensate their workers, chiefly upper management, by inculcating in them a desire to work towards the company’s prosperity.

Equity Financing - Equity Financing refers to the practice of issuing shares of stock in order to raise money for a business purpose. Examples of projects supported by equity financing are the construction of a new production facility, revamping of production lines, and expansion into new geographical distribution markets.

Equity Funds - An Equity Fund is a type of Mutual Fund that invests in stocks. The makeup of an equity fund can vary based on the judgment of the fund manager. Growth Funds and Value Funds are, for the most part, specific types of equity funds. Equity funds may also be composed of foreign stocks, in whole or in part.

ETF Trading - ETFs are similar to stocks in that they can be traded in much the same way, including short selling, buying on margin and in many cases allowing option puts and calls to be written against them. ETFs require no minimum investment and can be freely bought and sold without the threat of penalty.

Exchange Traded Funds - Exchange traded funds, also known as ETFs for short, are investment funds that trade as shares on major stock exchanges and act as tradable replicas of stock market indices like the NASDAQ or S&P 500. For many investors, it’s much easier to buy shares in an ETF modeled after the Dow Jones 100 than to purchase shares in all 100 Dow component companies.

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