Definition of European Union (EU)

European Union (EU)

an economic alliance originally created
in 1957 as the european Economic Community by
France, Germany, Italy, Belgium, the Netherlands, and Luxembourg
and later joined by the United Kingdom, Ireland,
Denmark, Spain, Portugal, and Greece; prior to the Maastricht
Treaty of 1993 was called the european Community;
has eliminated virtually all barriers to the flow of capital,
labor, goods, and services among member nations

European Union (EU)

An economic association of european countries founded by the Treaty of Rome in
1957 as a common market for six nations. It was known as the european Community before 1993 and is
comprised of 15 european countries. Its goals are a single market for goods and services without any
economic barriers and a common currency with one monetary authority. The eu was known as the european
Community until January 1, 1994.

Arbitrageurs

People who search for and exploit arbitrage opportunities.

Convertible eurobond

A eurobond that can be converted into another asset, often through exercise of
attached warrants.

Customs union

An agreement by two or more countries to erect a common external tariff and to abolish
restrictions on trade among members.

Delta neutral

The value of the portfolio is not affected by changes in the value of the asset on which the
options are written.

Economic union

An agreement between two or more countries that allows the free movement of capital,
labor, all goods and services, and involves the harmonization and unification of social, fiscal, and monetary
policies.

Euro CDs

CDs issued by a U.S. bank branch or foreign bank located outside the U.S. Almost all euro CDs
are issued in London.

Euro lines

Lines of credit granted by banks (foreign or foreign branches of U.S. banks) for eurocurrencies.

Euro straight

A fixed-rate coupon eurobond.

Eurobank

A bank that regularly accepts foreign currency denominated deposits and makes foreign currency loans.

Eurobond

A bond that is (1) underwritten by an international syndicate, (2) offered at issuance
simultaneously to investors in a number of countries, and (3) issued outside the jurisdiction of any single
country.

Euroclear

One of two principal clearing systems in the eurobond market. It began operations in 1968, is
located in Brussels, and is managed by Morgan Guaranty Bank.

Eurocredits

Intermediate-term loans of eurocurrencies made by banking syndicates to corporate and
government borrowers.

Eurocurrency deposit

A short-term fixed rate time deposit denominated in a currency other than the local
currency (i.e. US$ deposited in a London bank).

Eurocurrency market

The money market for borrowing and lending currencies that are held in the form of
deposits in banks located outside the countries of the currencies issued as legal tender.

Eurodollar

This is an American dollar that has been deposited in a european bank or an U.S. bank branch
located in europe. It got there as a result of payments made to overseas companies for merchandise.

Eurodollar bonds

eurobonds denominated in U.S.dollars.

Euroequity issues

Securities sold in the euromarket. That is, securities initially sold to investors
simultaneously in several national markets by an international syndicate. euromarket.
Related: external market

European Currency Unit (ECU)

An index of foreign exchange consisting of about 10 european currencies,
originally devised in 1979.

European Monetary System (EMS)

An exchange arrangement formed in 1979 that involves the currencies
of european union member countries.

European option

Option that may be exercised only at the expiration date. Related: american option.

European-style option

An option contract that can only be exercised on the expiration date.

Euroyen bonds

eurobonds denominated in Japanese yen.

Euro-commercial paper

Short-term notes with maturities up to 360 days that are issued by companies in
international money markets.

Euro-medium term note (Euro-MTN)

A non-underwritten euronote issued directly to the market. euro-
MTNs are offered continuously rather than all at once as a bond issue is. Most euro-MTN maturities are
under five years.

Euro-note

Short- to medium-term debt instrument sold in the eurocurrency market.

Force majeure risk

The risk that there will be an interruption of operations for a prolonged period after a
project finance project has been completed due to fire, flood, storm, or some other factor beyond the control
of the project's sponsors.

Neutral period

In the euromarket, a period over which eurodollars are sold is said to be neutral if it does not
start or end on either a Friday or the day before a holiday.

OPEC (Organization of Petroleum Exporting Countries)

A cartel of oil-producing countries.

Risk neutral

Insensitive to risk.

Eurobond

A debt security issued in a market other than the home market of
the company issuing the security

equivalent units of production (EUP)

an approximation of the number of whole units of output that could have been
produced during a period from the actual effort expended
during that period; used in process costing systems to assign
costs to production

pseudo microprofit center

a center for which a surrogate
of market value must be used to measure output revenue

European option

An option that can be exercised only on its expiration date.
Contrast with American option.

eurobond

Bond that is marketed internationally.

eurodollars

Dollars held on deposit in a bank outside the United States.

Eurodollars

Deposits denominated in U.S. dollars but held in banks located outside the United States, such as in Canada or France.

Neutrality of Money

The doctrine that the money supply affects only the price level, with no long-run impact on real variables.

Credit Union

Credit unions are community based financial co-operatives and most offer a full range of services. All are owned and controlled by members who are also shareholders. Credit unions are regulated provincially and insured by a stabilization fund, deposit insurance or guarantee corporation.
Credit unions are supported by a system of provincial credit union Centrals, a national credit union Central and affiliated national financial co-operatives.

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