Emerging Equity Long/Short
The strategy attempts to exploit informational inefficiencies in emerging markets. Portfolios will generally take long positions in the securities of firms operating in emerging markets. Shorts may not be available in many emerging markets so the manager may have to short ADR's or related securities.

Emerging Markets
Invests in equity or debt of emerging (less mature) markets which tend to have higher inflation and volatile growth. Short selling is not permitted in many emerging markets, and, therefore, effective hedging is often not available, although Brady bonds can be partially hedged via U.S. Treasury futures and currency markets.

Equilibrium Price
The market price at which the quantity supplied of a commodity equals the quantity demanded.

Equity Arbitrage
Strategies that exploit mispricings of equity and equity derivative securities.

Equity Market Neutral
A strategy under which the manager attempts to remove all directional market risk by being equally long and short. Such equality would cover at least dollar neutrality and extend in varying degrees to style, industry, and capitalization. The goal of the equity market neutral manager is to focus on bottom-up security selection and eliminate the impact of market movements on portfolio return. Besides security selection the manager controls the amount of cash and total investment exposure.

Event-Driven
An investment strategy seeking to identify and exploit pricing inefficiencies that have been caused by some sort of corporate event, such as a merger, spin-off, distressed situation, or recapitalization. Event-Driven strategies involve attempting to predict the outcome of a particular transaction as well as the optimal time at which to commit capital to it. The uncertainty about the outcome of these events creates investment opportunities for managers who can correctly anticipate their outcomes.

Exchange for Physicals (EFP)
A transaction generally used by two hedgers who want to exchange futures for cash positions. Also referred to as against actuals or versus cash.

Exchange of Futures for Cash
A transaction in which the buyer of a cash commodity transfers to the seller a corresponding amount of long futures contracts, or receives from the seller a corresponding amount of short futures, at a price difference mutually agreed upon. In this way the opposite hedges in futures of both parties are closed out simultaneously. Also called EFP (Exchange for Physical), AA (Against Actuals) or Ex-Pit transactions.

Exit Strategy
This is the means by which a private equity investor realizes upon the original investment. Typical mechanisms include an IPO, company buyback, acquisition by a third party, merger with another company, secondary sales in which the original investor sells to other investors or a write-off of an unsuccessful investment.

Exotic Options
Any of a wide variety of options with non-standard payout structures, including Asian options and Lookback options. Exotic options are mostly traded in the over-the-counter market.

Expiration Cycle
An expiration cycle relates to the dates on which options on a particular underlying security expire. A given option, other than LEAPS®, will be assigned to one of three cycles, the January cycle, the February cycle or the March cycle.

Expiration Date
Options on futures generally expire on a specific date during the month preceding the futures contract delivery month. For example, an option on a March futures contract expires in February but is referred to as a March option because its exercise would result in a March futures contract position.