Guide to Analysing Companies

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EFFICIENT MARKET THEORY
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that the prices of securities quickly reflect all the available in-
formation about them and that prices will automatically adjust
to this information. This is true to a point when markets are big
enough and liquid enough for no single investor (or group of in-
vestors) to have an effect on prices. Some markets – such as
New York and London – are efficient most of the time but not
always. Canny investors may profit when they are not.
EFTPOS
See electronic funds transfer at the point of sale.
Egibi
Probably the first recorded bank in history. Mr Egibi, the bank’s
founder, lived in Damascus in the latter part of the reign of the
Babylonian king Sennacherib (705–681bc). A stone tablet
recording the bank’s first loan is in the British Museum.
Electronic funds transfer at the point of sale
A way of paying for shopping electronically, commonly abbre-
viated to eftpos. A plastic debit card gives the retailer access
to a customer’s bank account. The account is debited imme-
diately with the cost of the goods or services purchased. Cus-
tomers still receive a receipt with the amount of the transaction
and, if necessary, can verify the payment seconds later by
checking the balance on their account at a nearby atm or cash
machine.
Electronic purse
Any method of storing money electronically and of carrying it
around like a purse. Hence a plastic debit card, with an em-
bedded microchip in which is stored value that can be spent on
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goods or services, is an electronic purse. (See also smart
card.)
Embedded value
The capital value of an insurance contract to an insurance
company, as measured by the annual premium income minus
the annual cost of managing the policy multiplied by the
number of years that the policy has to run. Thus a policy with
seven years to run that brings in a premium income of $35 a
year for an institution whose average cost of running a policy is
$20 a year has an embedded value of $105 [($35 
 $20)  7].
Emerging market
A stockmarket in a fast-developing country (such as Taiwan,
India or even China) that has little history of domestic capital
markets. In the late 1980s and early 1990s, some of the emerg-
ing markets grew rapidly. Their growth was fuelled by an in-
creasing supply of new shares – from local privatisations
and from the flotation of old-established family firms – and
by the increasing demand from western investors for stocks
whose prices would increase in value more quickly than many
of those in their domestic markets.
As western markets rebounded in the mid-1990s, the growth
of emerging markets slowed down. They were dealt a further
blow by Asia’s economic crisis, which began with the devalua-
tion of the Thai baht in July 1997. This caused stockmarkets in
the region to tumble, many to the point where their weight-
ings in world indices compiled by Morgan Stanley Capital In-
ternational and others were so small that international investors
began to lose interest in them. Since then many Asian markets
have rebounded, and new markets in eastern Europe have also
attracted investors’ attention.