the price of the next odd lot. The difference created between the last round-lot price and the odd-lot price is referred to as the odd-lot differential. Effective spread The gross underwritingspread adjusted for the impact that a common stockoffering's announcement has on the firm's share price. Effective tax rate The net rate a taxpayer pays on income that includes all forms of taxes. It is calculated by dividing the total tax paid by taxable income. Effective yield Yield or return on a short-terminvestment after adjustment for the change in exchange rates over the period of concern. Efficiency The degree and speed with which a market accurately incorporates information into prices. Efficient capital market A market in which new information is very quickly reflected accurately in share prices. Efficient diversification The organizing principle of portfolio theory, which maintains that any risk-averseinvestor will search for the highest expected return for any particular level of portfoliorisk. Efficient frontier The combinations of securitiesportfolios that maximize expected return for any level of expected risk, or that minimizes expected risk for any level of expected return. Pioneered by Harry Markowitz. Efficient market Market in which prices correctly reflect all relevant information. Efficient Market Hypothesis States that all relevant information is fully and immediately reflected in a security'smarket price, thereby assuming that an investor will obtain an equilibriumrate of return. In other words, an investor should not expect to earn an abnormal return (above the market return) through either technical analysis or fundamental analysis. Three forms of efficient market hypothesis exist: weak form (stockprices reflect all past information in prices), semistrong form (stock prices reflect all past and current publicly available information), and strong form (stock prices reflect all relevant information, including information not yet disclosed to the general public, such as insider information). Efficient markets theory (EMT) Principle that all assets are correctly priced by the market, and that there are no bargains. Efficient portfolio A portfolio that provides the greatest expected return for a given level of risk (i.e., standard deviation), or, equivalently, the lowest risk for a given expected return. Efficient set Graph representing a set of portfolios that maximize expected return at each level of portfolio risk. Efficient surface In meanvarianceskewness analysis, the set of portfolios that result from investor's preference for higher means, lower variance and higher (positive) skewness. The efficient surface is analogous (in three dimensions, mean, variance and skewness) to the efficient frontier (in two dimensions, mean and variance). Eighth[-ed] Historical term used in the context of general equities. A specialist or another broker is bidding higher or offering lower than we are, often topping or undercutting us by an eighth. Either/or facility An agreement permitting a bank customer to borrow either domestic dollars from the bank's head office or Eurodollars from one of its foreign branches. Either-or order Used in the context of general equities. See: Alternative order. Either-way market In the interbankEurodollar deposit market, an either-way market is one in which the bid and offered rates are identical. Elasticity of demand The degree of buyers' responsiveness to price changes. Elasticity