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Distribution channel: A chain of intermediaries that a firm‟s product must go through in order to
reach the customer. Also known as channel. See Multichannel distribution strategy.
Diversification: The reduction of risk that occurs when an investor holds many different stocks or
assets in a portfolio. This reduction of risk occurs due to variation in the rate or return earned by the
different stocks or bonds in a portfolio.
Doriot, Georges: Founder of American Research and Development Corporation in 1946, the first
publicly owned venture capital firm.
Economy of scale: The decrease in the marginal cost of production as a firm‟s output expands.
Effective income tax rate: Total income tax provision (expense) deducted from pretax income from
continuing operations divided by pretax income from continuing operations.
Efficient search sequence: A pattern of searching for nonrecurring items that is designed to
maximize their discovery and minimize search time.
Entrepreneurship: The practice of starting new organizations or revitalizing mature organizations in
response to identified opportunities.
Equity: Interest or ownership in a business.
Equity risk premium: A rate of return in addition to a risk-free rate to compensate for investing in
equity instruments because they have a higher degree of probable risk than risk-free instruments (a
component of the cost of equity capital or equity discount rate).
Eurozone: The countries in Europe that have adopted the euro as their official currency.
Exchange rate: The amount of currency in one country that can be purchased by one unit of currency
in another country.
Exchange rate risk: The risk of an adverse movement in exchange rates affecting prices of exports
and the value of assets or liabilities.
Express warranty: A guarantee that is provided by a seller of a good or service to a buyer that the
product or service will perform as required in the contract, and that, if not, it will repair or replace as
necessary.
Extraordinary gains and losses: Revenues or gains and expenses or losses that are both unusual and
nonrecurring.
Face or par value: The amount that is paid to bondholders when a bond matures and is retired. The
interest paid to bondholders is also based on the face or par value.