eTrade 2009 Annual Report Download - page 93

FINRA—Financial Industry Regulatory Authority.
Fixed Charge Coverage Ratio—Net loss before taxes, depreciation and amortization and corporate interest
expense divided by corporate interest expense. This ratio indicates the Company’s ability to satisfy fixed
financing expenses.
Freddie Mac—Federal Home Loan Mortgage Corporation.
Generally Accepted Accounting Principles (“GAAP”)—Accounting principles generally accepted in the
United States of America.
LIBOR—London Interbank Offered Rate. LIBOR is the interest rate at which banks borrow funds from
other banks in the London wholesale money market (or interbank market).
Interest rate cap—An options contract that puts an upper limit on a floating exchange rate. The writer of the
cap has to pay the holder of the cap the difference between the floating rate and the upper limit when that upper
limit is breached. There is usually a premium paid by the buyer of such a contract.
Interest rate floor—An options contract that puts a lower limit on a floating exchange rate. The writer of
the floor has to pay the holder of the floor the difference between the floating rate and the lower limit when that
lower limit is breached. There is usually a premium paid by the buyer of such a contract.
Interest rate swaps—Contracts that are entered into primarily as an asset/liability management strategy to
reduce interest rate risk. Interest rate swap contracts are exchanges of interest rate payments, such as fixed-rate
payments for floating-rate payments, based on notional principal amounts.
Long term investor—The customer group that includes those who invest for the long term.
LTV—Loan-to-value.
NASDAQ—National Association of Securities Dealers Automated Quotations.
Net New Customer Asset Flows—The total inflows to all new and existing customer accounts less total
outflows from all closed and existing customer accounts, excluding the effects of market movements in the value
of customer assets.
Net Present Value of Equity (“NPVE”)—The present value of expected cash inflows from existing assets,
minus the present value of expected cash outflows from existing liabilities, plus the expected cash inflows and
outflows from existing derivatives and forward commitments. This calculation is performed for E*TRADE Bank.
NOLs—Net operating losses.
Nonperforming assets—Assets that do not earn income, including those originally acquired to earn income
(nonperforming loans) and those not intended to earn income (REO). Loans are classified as nonperforming
when full and timely collection of interest and principal becomes uncertain or when the loans are 90 days past
due.
Notional amount—The specified dollar amount underlying a derivative on which the calculated payments
are based.
NYSE—New York Stock Exchange.
Operating margin—Loss before other income (expense), income tax benefit and discontinued operations.
Options—Contracts that grant the purchaser, for a premium payment, the right, but not the obligation, to
either purchase or sell the associated financial instrument at a set price during a period or at a specified date in
the future.
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