option An option that is part of the structure of a bond that gives either the bondholder or the issuer the right to take some action against the other party, as opposed to a bare option, which trades separately from any underlying security. Emergency fund A reserve of cash kept available to meet the costs of any unexpected financial emergencies. Emergency Home Finance Act of 1970 The federal legislation creating the Federal Home Loan Mortgage Corporation, a partially government-run program initiated to stimulate the development of a secondary mortgage market and expand mortgages available to veterans and other groups. Emerging Company Marketplace (ECM) A service once offered by the American Stock Exchange to help small growth companies fulfill special listing requirements. The service is no longer available. Emerging markets The financial markets of developing economies. Emerging Markets Free index (EMF) A Morgan Stanley Capital Internationalindex created to track stock markets in selected emerging markets that are open to foreign investment like Argentina, Chile, Jordan, Malaysia, Mexico, Philippines, and Thailand. Emerging markets fund A mutual fund that invests primarily in countries with developing economies (that is, those that are becoming industrialized). Emerging markets funds tend to be more volatile than domestic stock funds due to currency fluctuation and political instability. Consequently, fund prices can fluctuate dramatically. Employee contribution An employee's own deposit to a companyretirement plan. Employee Retirement Income Security Act (ERISA) The law that regulates the operation of private pensions and benefit plans. Employee stock fund A firm-sponsored program that enables employees to purchase shares of the firm's common stock on a preferential basis. Employee stock ownership plan (ESOP) A company contributes to a trust fund that buys stock on behalf of employees. Employee Stock Purchase Plan (ESPP) A plan usually linked to a corporation's payroll deduction system allowing employees to purchase shares at a discount from current market value. Employer matching contribution The amount, if any, a company contributes on an employee's behalf to the employee's retirement account, usually tied to the employee's own contribution. Employment rate The percentage of the labor force that is employed. The employment rate is one of the economic indicators that economists examine to help understand the state of the economy. See also: Unemployment rate. Empty head and pure heart test Securities and Exchange Commission rule that allows only the bidder of a tender offer to trade in the stock while possessing inside information. Encumbered A property owned by one party on which a second party reserves the right to make a valid claim, e.g., a bank's holding of a home mortgageencumbers property. End-of-year convention Treating cash flows as if they occur at the end of a year as opposed to the date convention. Under the end-of-year convention, the present is time 0, the end of year 1 occurs one year hence; and so on. Endogenous uncertainty Describes factors within the control of the firm, such as a decision to reveal information about price or input costs. Converse of exogenous. Endogenous variable A value determined within the context of a model. Related: Exogenous variable. Endorse Transferring