payment kind bond par what is
Payment-In-Kind (Pik) Bond, Paris Interbank Offer Rate (Pibor), Philadelphia Stock Exchange (Phlx.

Financial definitions for business owners P

  • Definition Paris Bourse Explain National stock market of France
  • Definition Public debt Explain Issues of debt by governments to compensate for a lack of tax revenues
  • Definition Put provision Explain Gives the holder of a floating-rate bond the right to redeem the note at par on the coupon payment date
  • Definition Pullback Explain The downward reversal of a prolonged upward price trend
  • Definition Pulling in their horns Explain stock or bond market has increased sharply or setting up hedging positions to guard against a negative turn of the market
  • Definition Purchase Explain Buy; be long; have an ownership position
  • Definition Purchase accounting Explain treats the acquirer as having purchased the assets and assumed the liabilities of the acquiree, which are then written up or down to their
  • Definition Purchase agreement Explain Used in connection with project financing; an agreement to purchase a specific amount of project output per period
  • Definition Purchase fund Explain Resembles a sinking fund, except that money is used to purchase bonds only if they are selling below their par value
  • Definition Purchase loan Explain A consumer loan taken to finance a purchase
  • Definition Purchase-money mortgage Explain A mortgage given by a buyer in lieu of cash when the buyer is unable to borrow commercially for the purchase of property
  • Definition Purchase order Explain A written order to buy specified goods at a stipulated price
  • Definition Purchase and sale Explain which a firm purchases securities from the issuer for its own account at a stated price and then resells them, as contrasted with a best
  • Definition Purchasing power Explain The amount of credit available for securities trading in a margin account, after taking margin requirements into consideration
  • Definition Purchasing power of the dollar Explain The amount of goods and services that can be exchanged for a dollar as compared with amount of a previous time period
  • Definition Purchasing power parity Explain domestic and foreign price levels should equal the equilibrium exchange rate between domestic and foreign currencies
  • Definition Purchasing power risk Explain Related: Inflation risk
  • Definition Pure discount bond Explain A bond that will make only one payment of principal and interest. Also called a zero-coupon bond or a single-payment bond
  • Definition Pure expectations theory Explain rates exclusively represent the expected future rates. In other words, the entire term structure reflects the market's expectations of
  • Definition Pure index fund Explain A portfolio that is managed so as to perfectly replicate the performance of the market portfolio
  • Definition Pure monopoly Explain total control over the entire market for a product due to some sort of barrier to entry for other firms, often a patent held by the
  • Definition Pure play Explain A company involved in only one line of business
  • Definition Pure yield pickup swap Explain Moving to higher yield-bonds
  • Definition Purpose loan Explain A loan that is backed by securities and that is used to buy other securities under certain government regulations
  • Definition Purpose statement Explain describes the use of a loan backed by securities, and guarantees that the funds lent will not be used illegally to buy securities against
  • Definition Put Explain An option granting the right to sell the underlying futures contract. Opposite of a call
  • Definition Put bond Explain either to exchange for par value at some date or to extend for a given number of years. If the price is above par, the put is a premium put
  • Definition Put-call parity Explain pricing principle that says, given a stock's price, a put and call of the same class must have a static price relationship because
  • Definition Projected maturity date Explain With CMOs, the date at the end of the estimated cash flow window where final payment is made
  • Definition Put-call parity relationship Explain put and the price of a call on the same underlying security with the same expiration date, which prevents arbitrage opportunities. Holding
  • Definition Put-call ratio Explain traded to the volume of call options traded, which is used as an indicator of investor sentiment (bullish or bearish
  • Definition Put guarantee letter Explain the person writing a put option has sufficient funds in an account to cover the exercise price if required
  • Definition Put option Explain to sell (or put) a fixed number of shares at a fixed price within a given period. An investor, for example, might wish to have the right
  • Definition Put an option Explain To exercise a put option
  • Definition Put price Explain The price at which an asset will be sold if a put option is exercised. Also called the strike or exercise price of a put option
  • Definition Portfolio Explain A collection of investments, real and/or financial
  • Definition Put to seller Explain Exercise a put option; require that the option writer to purchase the stock at the strike price
  • Definition Put swaption Explain the right, or option, to enter into a swap as a floating-rate payer. The writer of the swaption therefore becomes the floating-rate
  • Definition Protect Explain interest, buy or sell, will be attended to, given any change in the trading circumstances, as follows:At a price: If the stock trades at a
  • Definition Protectionism Explain Notion that governments should protect domestic industry from import competition by means of tariffs, quotas, and other trade barriers
  • Definition Protective covenant Explain agreement that limits certain actions a company may take during the term of the loan to protect the lender's interests
  • Definition Protective put buying strategy Explain A strategy that involves buying a put option on the underlying security that is held in a portfolio. Related: Hedge option strategies
  • Definition Provision for income taxes Explain An amount on the P & I statement that estimates a company's total income tax liability for the year
  • Definition Provisional call feature Explain that allows the issuer to call the issue during the noncall period if the price of the stock reaches a certain level. In the case of
  • Definition Proxy Explain electronic, that shareholders' votes may be cast by others. Shareholders can and often do give management their proxies, delegating
  • Definition Proxy contest Explain which a dissident group seeks, from the firm's other shareholders, the right to vote those shareholders' shares in favor of the
  • Definition Proxy fight Explain used by an acquiring company to attempt to gain control of a takeover target. The acquirer tries to persuade the shareholders of the
  • Definition Proxy statement Explain shareholders with information necessary to vote in an informed manner on matters to be brought up at a stockholders' meeting. Includes
  • Definition Proxy vote Explain Vote cast by one person or entity on behalf of another
  • Definition Prudent-man rule Explain A common law standard against which those investing the money of others (fiduciaries) are judged
  • Definition P;S Explain statement provided by the broker showing change in the customer's net ledger balance after the offset of any previously established
  • Definition PSA Prepayment Rate Explain s Mortgaged Asset-Backed Securities Division's prepayment model based on an assumed rate of prepayment each month of the then unpaid
  • Definition PSSG Explain Financial ratio defined as stock price divided by sales over sales growth. Often used in the valuation of Internet stocks. Related: PREG
  • Definition Public housing authority bond Explain Bonds of local public housing agencies that are secured by the federal government and whose proceeds are used to provide low-rent housing
  • Definition Public limited partnership Explain number of partners that is registered with the SEC and is available for public trading by broker/dealers
  • Definition Public offering price Explain The price of a new issue of securities at the time that the issue is offered to the public
  • Definition Public ownership Explain The portion of a company's stock that is held by the public
  • Definition Public-purpose bond Explain to finance public projects such as roads or government buildings. Interest on municipal bonds is federal income tax-free
  • Definition Public Securities Administration (PSA) Explain The trade association for primary dealers in U.S. government securities, including MBSs
  • Definition Public Utility Holding Company Act of 1935 Explain holding company abuses by reorganizing the financial structures of holding companies in the gas and electric utility industries and
  • Definition Public warehouse Explain Storage facility operated by an independent warehouse company on its own premises
  • Definition Publicly held Explain Describes a company whose stock is held by the public, whether individuals or business entities
  • Definition Publicly traded assets Explain Assets that can be traded in a public market, such as the stock market
  • Definition Puke Explain Slang for a trader selling a position, usually a losing position, as in, When in doubt, puke it out
  • Definition Probability distribution Explain values a random variable can take and the probability associated with each. Also called a probability function
  • Definition Probability function Explain A measure that assigns a likelihood of occurrence to each and every possible outcome
  • Definition Proceeds sale Explain OTC securities sale whose revenue is used to buy another security
  • Definition Producer Price Index (PPI) Explain Index measuring changes in wholesale prices, published by the U.S. Bureau of Labor Statistics every month
  • Definition Product cycle Explain The time it takes to bring new and/or improved products to market
  • Definition Product risk Explain occurs when a lender has an unusual loan in production or inventory but does not have a sale commitment at a prearranged price
  • Definition Production-flow commitment Explain An agreement by the loan purchaser to allow a monthly loan quota to be delivered in batches
  • Definition Production payment financing Explain financing in which a specified percentage of revenue realized from the sale of the project's output is used to pay debt service
  • Definition Production rate Explain The coupon rate at which a pass-through security guaranteed by Ginnie Mae is issued
  • Definition Productivity Explain The amount of output per unit of input, such as the quantity of a product produced per hour of capital employed
  • Definition Profile buyer/seller Explain stock who presents self as a buyer/seller to draw a call from a customer. That is the trader has nothing real, or natural
  • Definition Profit Explain Revenue minus cost. The amount one makes on a transaction
  • Definition Profit center Explain A division of an organization held responsible for producing its own profits
  • Definition Profit forecast Explain A prediction of future profits of a company, which may affect investment decisions
  • Definition Profit margin Explain of earnings available to stockholders to net sales. Determined by dividing net income by revenue for the same 12-month period. Result is
  • Definition Profit-sharing plan Explain An incentive system providing that employees share in company profits through a cash fund or a deferred plan used to buy stock or bonds
  • Definition Profitability index Explain The present value of the future cash flows divided by the initial investment. Also called the benefit-cost ratio
  • Definition Profitability ratios Explain performing. Profit margins measure performance with relation to sales. Rate of return ratios measure performance relative to some measure
  • Definition Program trades Explain trades in a large number of different stocks at as near the same time as possible. Also called basket trades. Related: Block trade
  • Definition Progress payments Explain contractor, or subcontractor for work as it is completed as desired, in order to reduce working capital requirements
  • Definition Progress review Explain A periodic review of a capital investment project to evaluate its continued economic viability
  • Definition Progressive tax system Explain A tax system providing that the average tax rate increases for some increases in income, but never decreases with an increase in income
  • Definition Project financing Explain A form of asset-based financing in which a firm finances a discrete set of assets on a stand-alone basis
  • Definition Project link Explain An econometric model forecasting and describing the effects of changes in different economies on other economies
  • Definition Project loans Explain mortgages on multiple-family housing complexes, nursing homes, hospitals, and other special development
  • Definition Project loan securities Explain Securities backed by a variety of FHA-insured loans-primarily multifamily apartment buildings, hospitals, and nursing homes
  • Definition Projection Explain forecast the future performance of a company, country, or other financial entity using historical and current information
  • Definition Promissory note Explain Written pledge to pay
  • Definition Property inventory Explain A list of personal property with corresponding values and initial costs often used to substantiate insurance claim and tax losses
  • Definition Property rights Explain own and use property as they see fit and to receive the stream of income that their property generates
  • Definition Property tax Explain A tax levied on real property based on its use and its assessed value
  • Definition Proportional representation Explain allows minority shareholders and groups of small shareholders to have a better chance of getting representation on a board of directors
  • Definition Proprietary trading Explain Principal trading in which firm seeks direct gain rather than commission dollars
  • Definition Proprietorship Explain owned and operated by only one person who has complete liability for all assets, and complete rights to all profits
  • Definition Prospectus Explain securities that describes the plan for a proposed business enterprise, or the facts concerning an existing one, that an investor needs to
  • Definition Price-weighted index Explain An index giving a greater influence to higher-valued stocks by weighting all component stocks by their price
  • Definition Prices (of equity) Explain Price of a share of common stock on the date shown. Highs and lows are based on the highest and lowest intraday trading price
  • Definition Priced out Explain The market has already incorporated information, such as a low dividend, into the price of a stock
  • Definition Pricey Explain Term used for an unrealistically low bid price or unrealistically high offer price
  • Definition Pricing efficiency Explain market characteristic that prices at all times fully reflect all available information that is relevant to the valuation of securities
  • Definition Primary dealer Explain Usually refers to the select list of securities firms that are authorized to deal in new issues of government bonds
  • Definition Primary distribution Explain Sale of a new issue of stock or bonds, as distinguished from a secondary distribution
  • Definition Primary earnings per (common) share Explain Earnings available for the payment of dividends to common stockholders divided by the number of common shares outstanding
  • Definition Primary market Explain Where a newly issued security is first offered. All subsequent trading of this security occurs is done in the secondary market
  • Definition Primary offering Explain Direct/Sale of a firm's newly issued shares by the firm to investors
  • Definition PRIME Explain and maximum equity, a certificate that entitles the owner to the dividend/income from an underlying security, but not to the capital
  • Definition Prime paper Explain The highest-quality, investment-grade debt of corporations as decided by rating agencies such as Moody's
  • Definition Prime rate Explain to their best (prime) customers. More often than not, a bank's most creditworthy customers borrow at rates below the prime rate
  • Definition Prime rate fund Explain A mutual fund that buys portions of corporate loans from banks and pays the interest to shareholders
  • Definition Primitive security Explain An instrument such as a stock or bond for which payments depend only on the financial status of the issuer
  • Definition Principal Explain 1) The total amount of money being borrowed or lent. (2) The party affected by agent decisions in a principal-agent relationship
  • Definition Principal-agent relationship Explain Occurs when one person, an agent, acts on the behalf of another person, the principal
  • Definition Principal amount Explain The face amount of debt; the amount borrowed or lent. Often called principal
  • Definition Principal Exchange-Rated-Linked Securities (PERLS) Explain and interest denominated in U.S. dollars, but with principal repayment depending on the exchange rate of the U.S. dollar against a foreign
  • Definition Principal stockholder Explain the voting stock of a company. Such stockholders must report all trading in the stock to the SEC pursuant insider trading rules
  • Definition Principle of diversification Explain assets differently correlated with one another will have negligible unsystematic risk. In other words, unsystematic risks disappear in
  • Definition Print Explain Used in the context of general equities. As a verb execute a trade, evidenced by its printing on the ticker tape. As a noun, a trade
  • Definition Prior-lien bond Explain A bond usually arising from reorganization with precedence over another bond of the same issuing company that is equally secured
  • Definition Prior-preferred stock Explain Preferred stock that has a higher claim on all dividends and assets in liquidation than claims of other preferred stock
  • Definition Private placement Explain directly to a limited number of investors. For example, sale of stocks, bonds, or other investments directly to an institutional investor
  • Definition Private letter ruling Explain A ruling by the IRS in response to a request for interpretation of a tax law
  • Definition Private limited partnership Explain A limited partnership with no more than 35 participants that is not registered with the SEC
  • Definition Private Mortgage Insurance (PMI) Explain Policy protecting the holder against loss resulting from default on a mortgage loan
  • Definition Private-purpose bond Explain A municipal bond allowing more than 10% of the proceeds go to private activities
  • Definition Private unrequited transfers Explain remittances to their country of origin as well as, e.g., gifts, dowries, inheritances, prizes, charitable contributions
  • Definition Privatization Explain The transfer of government-owned or government-run companies to the private sector, usually by selling them
  • Definition Pro forma capital structure analysis Explain alternative possible capital structure choices on a firm's credit statistics and reported financial results, especially to determine
  • Definition Pro forma financial statements Explain A firm's financial statements as adjusted to reflect a projected or planned transaction. What-if" analysis
  • Definition Pro forma statement Explain forecast or projected operating results and balance sheet, as in pro forma income statements, balance sheets, and statements of cash flows
  • Definition Probability Explain The relative likelihood of a particular outcome among all possible outcomes
  • Definition Probability density function Explain The function that describes the change of certain realizations for a continuous random variable
  • Definition Prerefunding Explain a lower interest rate in order to pay off the first bond at the first call date and to reduce overall borrowing costs
  • Definition Presale order Explain An order to purchase part of a new municipal bond issue that is accepted by an underwriting syndicate before an official public offering
  • Definition Present value Explain equivalent in value to a payment, or to a stream of payments, to be received in the future. To determine the present value, each future
  • Definition Present value factor Explain the present value of an amount to be received in a future period. If the opportunity cost of funds is 10% over next year, the factor is
  • Definition Present value of growth opportunities Explain Net present value (NPV) of investments the firm is expected to make in the future
  • Definition President Explain Highest-ranking officer in a corporation after the chief executive officer
  • Definition Pattern Explain A technical chart formation used to make market predictions by following the price movements of securities
  • Definition Presidential election cycle theory Explain A theory that stock market trends can be predicted and explained by the four-year presidential election cycle
  • Definition Pre-sold issue Explain An issue that is sold out before the coupon announcement
  • Definition Pre-tax earnings or profits Explain Net income before federal income taxes are subtracted
  • Definition Pre-tax rate of return Explain Gain on a security before taxes
  • Definition Pre-trade benchmarks Explain Prices occurring before or at the decision to trade
  • Definition Previous balance method Explain Method of calculating finance charges based on the account balance at the end of the previous month
  • Definition Price of admission Explain Cost to become a player in a stock in an inordinately aggressive market (i.e., locking on one side, size or price concessions); trader
  • Definition Price-book ratio Explain the value of total assets less total liabilities (book value). Determined by dividing current stock price by common stockholder equity per
  • Definition Price change Explain Increase or decrease in the closing price of a security compared to the previous day's closing price
  • Definition Price compression Explain appreciation potential for a callable bond in a declining interest rate environment, based on the expectation that the bond will be
  • Definition Price discovery process Explain The process of determining the prices of assets in the marketplace through the interactions of buyers and sellers
  • Definition Price-earnings ratio Explain a stock sells. Determined by dividing current stock price by current earnings per share (adjusted for stock splits). Earnings per share
  • Definition Price elasticities Explain divided by a percentage change in the price. Answers the question: How much will the demand for my product decrease if I raise prices by 10
  • Definition Price gap Explain rockets or dives in a direction away from its last price range, such as a stock with a trading range of $10-$12 that closes at $12 and
  • Definition Price impact costs Explain Related: Market impact costs
  • Definition Projected benefit obligation (PBO) Explain liability at the calculation date assuming that the plan is ongoing and will not terminate in the foreseeable future. Related: Accumulated
  • Definition Price leadership Explain A price charged by the dominant producer that becomes the price adopted by all the other producers
  • Definition Price momentum Explain Related: Relative strength
  • Definition Price persistence Explain Related: Relative strength
  • Definition Price range Explain The interval between the high and low prices over which a stock has traded over a particular period of time
  • Definition Price risk Explain or a portfolio) will decline in the future. Or, a type of mortgage pipeline risk created in the production segment when loan terms are set
  • Definition Price-sales ratio Explain price by revenue per share (adjusted for stock splits). Revenue per share for the P/S ratio is determined by dividing revenue for past 12
  • Definition Price-specie flow mechanism Explain gold standard allowing disturbances in the price level in one country to be wholly or partly offset by a countervailing flow of specie
  • Definition Price spread Explain buying and selling two options on the same security with the same expiration month, but with different exercise prices
  • Definition Price support Explain Government intervention to set an artificially high price through the use of a price floor designed to aid producers
  • Definition Price takers Explain Individuals who respond to rates and prices by acting as though prices have no influence on them
  • Definition Price-volume relationship Explain technical analysts that signals continuing rises or falls in security prices that are related to changes in volume traded
  • Definition Positive yield curve Explain higher than short-term debt rates (because of the increased risk involved with long-term debt security
  • Definition Possessions corporation Explain the U.S. tax code whose branch operation in a U.S. possession can obtain tax benefits as though it were operating as a foreign subsidiary
  • Definition Post-audit Explain A set of procedures for evaluating a capital budgeting decision after the fact
  • Definition Post-dated check Explain A check that becomes payable and negotiable on a future date specified
  • Definition Postponement option Explain The option of deferring a project without eliminating the possibility of undertaking it
  • Definition Postponing income Explain Purposely delaying receipt of income to a later year in order to reduce current tax liability
  • Definition Post-trade benchmarks Explain Prices after the decision to trade
  • Definition Pot Explain is returned to the managing underwriter by the participating investment bankers for sale to institutional investors
  • Definition Pot is clean Explain Phrase used when managing underwriter has sold the entire pot
  • Definition Power of attorney Explain person to perform certain acts on behalf of another, such as moving of assets between accounts or trading for a person's benefit
  • Definition Prearranged trading Explain Possibly fraudulent practice whereby commodities dealers carry out risk-free trades at predetermined prices to acquire tax advantages
  • Definition Precautionary demand (for money) Explain The need to meet unexpected or extraordinary contingencies with a buffer stock of cash
  • Definition Precautionary motive Explain A desire to hold cash in order to be able to deal effectively with unexpected events that require cash outlay
  • Definition Precedence Explain trades in an exchange. For example, the highest bid and lowest offer have highest precedence; the first bid or first offer at a price has
  • Definition Precious metals Explain which are used for their intrinsic value or for their value in production. These may be traded either in their physical state or by way of
  • Definition Precompute Explain the annual interest is either deducted from the face amount of the loan when the funds are distributed or is added to the total amount and
  • Definition Preemptive right Explain Common stockholders' right to anything of value distributed by the company
  • Definition Preference Explain Selection of a dealer to handle a trade despite the dealer's market not being the best available. Often the preferenced dealer will
  • Definition Preference stock Explain preferred stock but senior to common stock in the right to receive payments from the firm; essentially junior preferred stock
  • Definition Preferred dividend coverage Explain Net income after interest and taxes (before common stock dividends) divided by preferred stock dividends
  • Definition Preferred habitat theory Explain believes the term structure reflects the expectation of the future path of interest rates as well as risk premium. The theory rejects the
  • Definition Preferred stock Explain corporation and gives the holder a claim, prior to the claim of common stockholders, on earnings and also generally on assets in the event
  • Definition Preferred stock agreement Explain A contract for preferred stock
  • Definition Preferred stock ratio Explain Preferred stock at par value divided by total capitalization, which gives the portion of capitalization that consists of preferred stock
  • Definition PREG Explain Financial ratio defined as stock price divided by sales over earnings growth. Often used in the valuation of Internet stocks. Related: PSSG
  • Definition Preliminary prospectus Explain An initial or tentative version of a prospectus
  • Definition Premium bond Explain A bond that is selling for more than its par value
  • Definition Premium income Explain The income received by an investor who sells an option
  • Definition Premium raid Explain of a company's stock to gain control by offering stockholders a premium over the market value for their shares
  • Definition Prepackaged bankruptcy Explain A bankruptcy in which a debtor and its creditors pre-negotiate a plan of reorganization and then file it along with the bankruptcy petition
  • Definition Prepaid interest Explain An asset account showing interest that has been paid in advance, which is expensed and charged to the borrower's P & L statement
  • Definition Prepayment penalty Explain A fee a borrower pays a lender when the borrower repays a loan before its scheduled time of maturity
  • Definition Prepayment speed Explain at which mortgagors pay off their loans ahead of schedule, critical in assessing the value of mortgage pass-through securities
  • Definition Prepayments Explain Payments made in excess of scheduled mortgage principal repayments
  • Definition Prerefunded bond Explain Refunded bond
  • Definition Policy asset allocation Explain assess an appropriate long-term normal mix of assets that represents an ideal blend of controlled risk and enhanced return
  • Definition Policy limit Explain The maximum dollar amount of coverage provided by an insurance company for a certain policy
  • Definition Policy loan Explain interest rate from an insurance company to a policyholder that is secured by the cash surrender value of a life insurance policy
  • Definition Policyholder Explain An individual who owns an insurance policy
  • Definition Policyholder loan bonds Explain policyholders that are secured by the cash surrender value of the policies, and are offered by a broker/dealer as bonds
  • Definition Political risk Explain expropriation of assets, changes in tax policy, restrictions on the exchange of foreign currency, or other changes in the business climate
  • Definition Pool Explain investment projects are financed out of a pool of bonds, preferred stock, and common stock, and a weighted-average cost of capital must be
  • Definition Pool factor Explain divided by the original principal balance with the result expressed as a decimal. Pool factors are published monthly by the Bond Buyer
  • Definition Pooling of interests Explain acquisitions accomplished through the use of equity. The combined assets of the merged entity are consolidated using book value, as opposed
  • Definition Portability Explain The character of benefits that may be carried from a previous job to the next
  • Definition Portfolio beta Explain The beta of a portfolio is the weighted sum of the individual asset betas, According to the proportions of the investments in the
  • Definition Portfolio internal rate of return Explain determining the cash flows for all the bonds in the portfolio and then finding the interest rate that will make the present value of the
  • Definition Portfolio management Explain Related: Investment management
  • Definition Portfolio opportunity set Explain The expected return/standard deviation pairs of all portfolios that can be constructed from a given set of assets
  • Definition Portfolio R2 Explain Number between 0 and 1 that measures the strength of correlation of movement between the portfolio/stock and the index. Indeed, the R2 is
  • Definition Program trading Explain programs, usually entered directly from the trader's computer in to the market's computer system and executed automatically
  • Definition Portfolio separation theorem Explain of a risky investment portfolio is separate from his attitude towards risk. Related: Fisher's separation theorem
  • Definition Portfolio turnover rate Explain For an investment company, an annualized rate found by dividing the lesser of purchases and sales by the average of portfolio assets
  • Definition Portfolio variance Explain Weighted sum of the covariance and variances of the assets in a portfolio
  • Definition Position Explain contracts bought or sold for which no offsetting transaction has been entered into. The buyer of a commodity is said to have a long
  • Definition Position building Explain Buying shares to build up a long position or selling shares to create a short position in a particular security or group of securities
  • Definition Position diagram Explain Diagram showing the possible payoffs from a derivative investment
  • Definition Position limits Explain position available in any one future or option contract for a given institution. For bona fide futures hedgers, there are no position
  • Definition Position self Explain Used in the context of general equities. Going long or short in anticipation of a stock's movement
  • Definition Position sheet Explain List of long and short positions for an individual trader or desk, at times accompanied by the trades from the previous trading session
  • Definition Position trader Explain term approach in maintaining positions in the market and does not close out of these positions until close to the delivery date
  • Definition Positive carry Explain Related: Net financing cost
  • Definition Positive convexity Explain the price appreciation for a large downward change in interest rates will be greater (in absolute terms) than the price depreciation for
  • Definition Positive covenant (of a bond) Explain A bond covenant that specifies certain actions the firm must take. Also called an affirmative covenant
  • Definition Piece Explain Increment of bonds that trade in portions of $1000 minimum. Not all bonds can be traded in pieces, and the increments can vary
  • Definition Pie model of capital structure Explain firms, graphically depicted in slices of a pie that represent the value of the firm in the capital markets
  • Definition Piggyback registration Explain existing holdings of shares in a corporation to be sold in combination with an offering of new public shares
  • Definition Piggybacking Explain commodities in a personal account following a trade just made for a customer. The broker assumes that the customer is making the trade on
  • Definition PIK (Payment-in-kind) securities Explain Highly speculative bonds or preferred stock that pay interest or dividends through additional bonds or preferred stock
  • Definition Pink sheets Explain Daily publication of the national quotation bureau that reports the bid and ask prices of thousands of OTC stocks, as well as the market
  • Definition Pip Explain Used for listed equity securities. Smallest unit of a currency (i.e., cents for U.S. dollars
  • Definition Pipeline Explain The underwriting process that must be completed with the SEC before a security can be offered for sale to the public
  • Definition Pit Explain A specific area of the trading floor that is designed for the trading of commodities, individual futures, or option contracts
  • Definition Pit committee Explain A committee of the exchange that determines the daily settlement price of futures contracts
  • Definition PITI Explain Stands for principal, interest, taxes, and insurance, the four main parts of monthly mortgage obligations
  • Definition Pivot Explain significant by market's failure to penetrate or as being significant when a sudden increase in volume accompanies the move through the
  • Definition P;L Explain Profit and loss statement for a trader
  • Definition Post Explain Particular place on the floor of an exchange where transactions in stocks listed on the exchange occur
  • Definition Placement Explain A bank depositing Eurodollars with (selling Eurodollars to) another bank is often said to be making a placement
  • Definition Placement ratio Explain municipal bond offerings that have been bought from the underwriters, according to the Bond Buyer newspaper
  • Definition Plain vanilla Explain simple derivative financial instrument, usually a swap or other derivative that is issued with standard features
  • Definition Plan participants Explain Employees or other beneficiaries who are eligible to receive benefits from a company's employee benefit plan
  • Definition Plan for reorganization Explain A plan for reorganizing a firm during the Chapter 11 bankruptcy process
  • Definition Plan sponsors Explain plans, including private business entities acting for their employees; state and local entities operating on behalf of their employees
  • Definition Planned capital expenditure program Explain Budgeted or projected outlays for major expenditures on permanent or fixed assets as outlined in the corporate financial plan
  • Definition Planned financing program Explain Budgeted or projected ways need for reasons or to obtain short-term and long-term financing as outlined in the corporate financial plan
  • Definition Planning horizon Explain The length of time a model or investor or plan projects into the future
  • Definition Plant Explain The assets of a business including land, buildings, machinery, and all equipment permanently employed
  • Definition Player Explain Used in the context of general equities. Customer or trader who is actively involved in a particular stock or the market in general
  • Definition Playing the market Explain Trading in high, uncalculated risk usually refers to actions of amateur investors
  • Definition Plow back Explain To reinvest earnings in a business rather than pay out them out as dividends. Common practice in high-growth companies
  • Definition Plowback rate Explain Related: Retention rate
  • Definition Plug Explain A variable that handles financial slack in the financial plan
  • Definition Parent company Explain A company that controls subsidiaries through its ownership of voting stock, as well as runs its own business
  • Definition Plus Explain in government bonds normally give price quotes in 32nds. To quote a bid or offer in 64ths, they use pluses; a dealer who bids 4+ is
  • Definition Portfolio manager Explain Professional responsible for the securities portfolio of an individual or institutional investor, such as a mutual fund, pension fund
  • Definition Plus tick seller Explain Used for listed equity securities. A short seller (referring to the regulation requiring a plus tick to short
  • Definition Point Explain The smallest unit of price change quoted, or one one-hundredth of a percent. Related: Minimum price fluctuation and tick
  • Definition Point and figure chart Explain account only whole integer changes in price, i.e., a 2-point change. Point and figure charting disregards the element of time and is used
  • Definition Poison pill Explain prospective acquiree's shareholders the right to buy shares of the firm or shares of anyone who acquires the firm at a deep discount
  • Definition Poison put Explain A covenant allowing the bondholder to demand repayment in the event of a hostile takeover
  • Definition Performance evaluation Explain results, which involves, first, determining whether the money manager added value by outperforming the established benchmark (performance
  • Definition Performance fund Explain A growth-oriented mutual fund investing in growth stock and performance stock with low dividends and high risk
  • Definition Performance measurement Explain Calculation of the return a money manager realizes over some time interval
  • Definition Performance shares Explain the basis of performance as measured by earnings per share and similar criteria. A control device shareholders sometimes use to tie
  • Definition Performance stock Explain retains earnings for further growth and therefore pays no dividends, but that an investor feels has significant future potential
  • Definition Period-certain annuity Explain An annuity that provides guaranteed payments to an annuitant for a specified period of time
  • Definition Period of digestion Explain The time period of often high volatility after a new issue is released when the trading price of the security is established by the market
  • Definition Periodic payment plan Explain Accumulation of capital in a mutual fund by making regular payments on a monthly or quarterly basis
  • Definition Periodic purchase deferred contract Explain for which fixed-amount premiums are paid either monthly or quarterly, and that does not begin paying out until a time elected by the
  • Definition Periodic rate Explain The monthly effective interest rate. For example, the periodic rate on a credit card with an 18% annual percentage rate is 1.5% per month
  • Definition Permanent financing Explain Long-term financing using either debt or equity
  • Definition Perpendicular spread Explain Option strategy involving the purchase of options with similar expiration dates and different exercise prices
  • Definition Perpetual bond Explain Nonredeemable bond with no maturity date that pays regular interest rates indefinitely
  • Definition Perpetual inventory Explain Recordkeeping system in which book inventory is updated daily
  • Definition Perpetual warrants Explain Warrants that have no expiration date
  • Definition Perpetuity Explain A constant stream of identical cash flows without end, such as a British consol
  • Definition Perquisites Explain benefits, such as the use of a firm car or expense account for personal business, and indirect benefits, such as up-to-date office
  • Definition Personal article floater Explain Insurance policy attachment designed to cover specified personal valuables
  • Definition Personal exemption Explain Amount of money a taxpayer can exclude from personal income for each member of the household in calculation of a tax obligation
  • Definition Personal income Explain Total income received from all sources, including wages, salaries, or rents, and the like
  • Definition Personal inflation rate Explain The inflation rate as it affects a specific individual
  • Definition Personal property Explain Any assets other than real estate
  • Definition Personal tax view (of capital structure) Explain personal tax rates between income from debt and income from equity eliminates the disadvantage of the double taxation (corporate and
  • Definition Personal trust Explain An interest in an asset held by a trustee for the benefit of another person
  • Definition Phantom income Explain Income from a limited partnership that creates taxability without generating cash flow
  • Definition Phantom stock plan Explain An incentive scheme that awards management bonuses based on increases in the market price of the company's stock
  • Definition Philadelphia Board of Trade (PBOT) Explain A subsidiary of the Philadelphia Stock Exchange that trades currency futures
  • Definition Philippine Stock Exchange Explain Stock exchange based in the Philippines, which operates two trading floors, at Manila and Makati
  • Definition Phillips Curve Explain relationship between inflation and unemployment. It is conjectured that there is a simple trade-off between inflation and unemployment
  • Definition Phone switching Explain same mutual fund family by telephone request. There may be a charge associated with these transfers. Phone switching is also possible
  • Definition Private market value (PMV) Explain The break-up market value of all divisions of a company if divisions were each independent and established their own market stock prices
  • Definition Physical verification Explain A procedure auditors use to ensure that inventory recorded in the book is correct by actually checking out the physical inventory
  • Definition P & I Explain Stands for principal and interest on bonds or mortgage-backed securities
  • Definition Pickup Explain The gain in yield that occurs when a block of bonds is swapped for another block of higher-coupon bonds
  • Definition Pickup bond Explain that is close to the date at which it is callable, meaning that a fall in interest rates will most likely cause early redemption of the
  • Definition Picture Explain quotes for a given security. Used for listed equity securities. Bid and ask prices and quantity information from a specialist or from a
  • Definition Payments netting Explain affiliates to only a netted amount. Netting can occur on a bilateral basis (between pairs of affiliates), or on a multi-lateral basis
  • Definition Payments pattern Explain receivables. The pattern might describe the probability that a 72-day-old account will still be unpaid when it is 73 days-old
  • Definition Payoff diagram Explain In option pricing, a graph of the value of the option position at expiration as a function of the underlying asset price
  • Definition Payout ratio Explain paid out to the common stockholders as cash dividends. More specifically, the firm's cash dividend divided by the firm's earnings
  • Definition P/E ratio Explain annual earnings per share or expected annual earnings per share. Assume XYZ Co. sells for $25.50 per share and has earned $2.55 per share
  • Definition P/E effect Explain That portfolios with low P/E stocks exhibit higher average risk-adjusted returns than those with high P/E stocks. Related: Value manager
  • Definition Peak Explain The high point at the end of an economic expansion until the start of a contraction
  • Definition Pecking-order view (of capital structure) Explain transactions costs, especially those associated with the problem of adverse selection, create a dynamic environment in which firms have a
  • Definition Pegging Explain Making transactions in a security, currency, or commodity in order to stabilize or target its value through market intervention
  • Definition Penalty clause Explain A clause found in contract agreements that provides for a penalty in the event of default
  • Definition Pennant Explain A chart pattern resembling a pointed flag, with the point facing to the right, which shows a diminishing variance of price
  • Definition Penny stock Explain Stock that typically sells for less than $1 a share, although it may rise to as much as $10/share after the initial public offering
  • Definition Pension fund Explain A fund set up to pay the pension benefits of a company's workers after retirement
  • Definition Pension parachute Explain the event of a hostile takeover attempt, any excess pension plan assets can be used to benefit pension plan participants. This prevents
  • Definition Pension plan Explain A fund that is established for the payment of retirement benefits
  • Definition Pension reversion Explain Termination of an overfunded defined benefit pension plan and replacement of it with a life insurance company-sponsored fixed annuity plan
  • Definition Pension sponsors Explain Organizations that have established a pension plan
  • Definition Penultimate profit prospect (PPP) Explain highest-yielding stocks in the Dow Jones Industrial Average that is said (by authors O'Higgins and Downes) to be the Dow stock with
  • Definition People pill Explain A form of poison pill providing that the entire management threatens to resign in the event of a takeover
  • Definition Per capita debt Explain The total bonded debt of a municipality divided by the population of the municipality
  • Definition Percent to double Explain Percentage that the stock price has to rise (fall) to double the price of the call (put
  • Definition Percentage premium Explain Applies mainly to convertible securities. Premium over parity of a convertible bond divided by parity
  • Definition Perfect capital market Explain A market in which there are never any arbitrage opportunities
  • Definition Perfect competition Explain An idealized market environment in which every market participant is too small to affect the market price by acting on its own
  • Definition Perfect hedge Explain A situation in which the profit and loss from the underlying asset and the hedge position are equal
  • Definition Perfect market view (of capital structure) Explain Analysis of a firm's capital structure decision, which shows the irrelevance of capital structure in a perfect capital market
  • Definition Perfect market view (of dividend policy) Explain Analysis of a decision on dividend policy, in a perfect capital market environment, that shows the irrelevance of dividend policy
  • Definition Perfected first lien Explain duly recorded with the relevant government body so that the lender will be able to act on it should the borrower default
  • Definition Perfectly competitive financial markets Explain power to change the price of goods or services. Perfect capital markets are characterized by certain conditions: (1) Trading is costless
  • Definition Performance attribution analysis Explain 039;s performance results to explain the reasons why those results were achieved. This analysis seeks to answer questions such as: (1) What
  • Definition Performance bond Explain A surety bond between two parties, insuring one party against loss if the terms of a contract are not fulfilled
  • Definition Participating convertible preferred stock Explain into common stock at the option of the holder. In contrast, to the usual preferred stock, the value of the preferred stock is refunded to
  • Definition Participating dividend Explain Dividend received from ownership of participating preferred stock
  • Definition Participating fees Explain The portion of total fees in a syndicated credit that go to the participating banks
  • Definition Participating GIC Explain policyholder is not guaranteed a crediting rate, but instead receives a return based on the actual experience of the portfolio managed by
  • Definition Participating life insurance policies Explain policyholders depending on the company's success as provided by few claims and profitable underwritings and investments
  • Definition Participating preferred stock Explain Preferred stock that provides the holder with a specified dividend plus the right to additional earnings under specified conditions
  • Definition Participation loan Explain A large loan made by a group of lenders, that enables a borrower to obtain financing above the legal lending limit of an individual lender
  • Definition Partner Explain Business associate who shares equity in a firm
  • Definition Partnership agreement Explain A written agreement among partners detailing the terms and conditions of participation in a business ownership arrangement
  • Definition Pass the book Explain responsibility for a brokerage firm's trading account from one office to another around the world in order to benefit from trading 24
  • Definition Pass-through coupon rate Explain pool of assets, which is less than the rate paid on the underlying loans by an amount equal to the servicing and guaranteeing fees
  • Definition Pass-through rate Explain The net interest rate passed through to investors after deducting servicing, management, and guarantee fees from the gross mortgage coupon
  • Definition Pass-through securities Explain backed by a package of assets (i.e., mortgages) where the holder receives the principal and interest payments. Related: Mortgage pass
  • Definition Passive Explain Income or loss from business activities in which a person does not materially participate, such as a limited partnership
  • Definition Passive Activity Loss (PAL) Explain A loss incurred in participating in passive investing
  • Definition Passive bond Explain A bond without any interest yield
  • Definition Passive Income Generator (PIG) Explain An investment that favors passive income, such as an income-oriented real estate limited partnership
  • Definition Passive investing Explain Putting money into a profitable business opportunity that is deemed passive by the IRS and thus benefits from tax deductions
  • Definition Passive portfolio Explain A market index portfolio
  • Definition Passive portfolio strategy Explain expectational input, and instead relies on diversification to match the performance of some market index. A passive strategy assumes that
  • Definition Patent Explain intellectual property in producing or selling a particular product or using a process for a designated period of time
  • Definition Path-dependent option Explain An option whose value depends on the sequence of prices of the underlying asset rather than just the final price of the asset
  • Definition Pay-as-you-go basis Explain A method of paying income tax in which the employer deducts a portion of an employee's monthly salary to remit to the IRS
  • Definition Pay-to-play Explain businesses to gain influence with political officials who decide which underwriters are awarded the municipality's business
  • Definition Parameter Explain such as GDP growth, and coefficients which multiply these variables. The coefficients are often estimated from the data. The coefficients
  • Definition Pay-up Explain into higher-priced bonds or the need/willingness of a bank or other borrower to pay a higher rate of interest to get funds. Used in the
  • Definition Payable through drafts Explain to maintain control over payments made on behalf of the firm by personnel in noncentral locations. The payer's bank delivers the
  • Definition Payables Explain Related: Accounts payable
  • Definition Payback Explain The length of time it takes to recover the initial cost of a project, without regard to the time value of money
  • Definition Pay-down Explain which the par value of the securities maturing exceeds that of those sold. In the context of general equities, paying a lower price in an
  • Definition Payee Explain A person receiving payment through any form of money transfer method
  • Definition Payer Explain The person making a payment to a payee
  • Definition Paying agent Explain An agent who makes principal and interest payments to bondholders on behalf of the issuer
  • Definition Payment date Explain The date on which shareholders of record will be sent a check for the declared dividend
  • Definition Payment float Explain Company-written checks that have not yet cleared
  • Definition Project loan certificate (PLC) Explain A primary program of Ginnie Mae for securitizing FHA-insured and coinsured multifamily, hospital, and nursing home loans
  • Definition Project notes (PN) Explain finance federally sponsored programs in urban renewal and housing and guaranteed by the U.S. Department of Housing and Urban Development
  • Definition Principal-only (PO) Explain holder receives only principal cash flows on the underlying mortgage pool. All the principal distribution due from the underlying
  • Definition Price value of a basis point (PVBP) Explain point; a measure of the change in the price of a bond if the required yield changes by one basis point
  • Definition PAC Bond Explain bond. A tranche class offered by some CMOs that has a sinking fund schedule and an ability to make principal payments that are not
  • Definition Pacific Stock Exchange Explain Used for listed equity securities. Regional exchange located in Los Angeles and San Francisco; only U.S. exchange open between 4:00 and 4:30
  • Definition Pac-Man strategy Explain prospective acquiree retaliates against the acquirer's tender offer by launching its own tender offer for the other firm
  • Definition Package mortgage Explain A mortgage on a house and property in the house
  • Definition Paid-in capital Explain exchange for stock, but not stock from capital generated from earnings or donated. This account includes capital stock and contributions of
  • Definition Paid up Explain When all payments that are due have been made
  • Definition Paid-up policy Explain A life insurance policy in which all premiums that are due have been paid
  • Definition Painting the tape Explain manipulate the market by buying and selling a security to create the illusion of high trading activity and to attract other traders who may
  • Definition Paired off Explain Matched buy and sell market orders, usually pertaining to the pre-opening market picture in a stock, or MOC orders (especially relating to
  • Definition Paired shares Explain Stock of two companies under the same management that are sold as one unit with one certificate
  • Definition Pairoff Explain A buyback to offset and effectively liquidate a prior sale of securities
  • Definition Panic buying or selling Explain high volume in anticipation of sharply rising or falling prices, usually after unexpected news is released
  • Definition Paper Explain Money market instruments, commercial paper, and other
  • Definition Paper dealer Explain A brokerage firm that buys and sells commercial paper to make a profit
  • Definition Paper gain (loss) Explain Unrealized capital gain (loss) on securities held in a portfolio based on a comparison of current market price to original cost
  • Definition Portfolio insurance Explain in the underlying stock to create a synthetic put option. The strategy's goal is to ensure that the value of the portfolio does not
  • Definition Par bond Explain A bond trading at its face value
  • Definition Par value Explain Also called the maturity value or face value; the amount that an issuer agrees to pay at the maturity date
  • Definition Par value of currency Explain The official exchange rate between two countries' currencies
  • Definition Parallel loan Explain different countries borrow each other's currency for a specific period of time, and repay the other's currency at an agreed
  • Definition Private Export Funding Corporation (PEFCO) Explain for financing the export of big-ticket items by U.S. firms by purchasing at fixed interest rates the medium- to long-term debt obligations
  • Definition Parallel shift in the yield curve Explain the change in the interest rate on all maturities is the same number of basis points. In other words, if the three month T-bill increases
  • Definition Purchase method Explain market value for the consolidation of the two entities' net assets on the balance sheet. Generally, depreciation/amortization will
  • Definition Parity value Explain Related: Conversion value
  • Definition Parking Explain Putting money into safe investments such as money market investments while deciding where to invest the money
  • Definition Private-label pass-throughs Explain Related: Conventional pass-throughs
  • Definition Partial Explain Trade whose size is only part of the total customer indication/order, usually made to avoid a compromise in price and also to get some
  • Definition Passive investment management Explain Buying a well diversified portfolio to represent a broad-based market index without attempting to search out mispriced securities
  • Definition Participating buyer/seller Explain Customer willing to buy/sell in line with market. (2) Buyer/seller who goes along with another buyer/seller in a percentage order
  • Definition P Explain Fifth letter of Nasdaq stock symbol specifying issue is the company's first class of preferred shares
  • Definition P2P Explain Business slang, usually used in reference to startups or internet startup, refers to path to profitability
  • Definition Planned amortization class (PAC) Explain stable cash flows and the lowest prepayment risk of any class of CMO Because of a stable cash flow, it is considered the least risky CMO (2
  • Definition Preauthorized checks (PAC) Explain in advance, and written either by the payee or by the payee's bank and then deposited in the payee's bank account
  • Definition Preauthorized electronic debits (PAD) Explain the payer. The payer's bank sends payment to the payee's bank through the Automated Clearing House (ACH) system
  • Definition Pension Benefit Guaranty Corporation (PBGC) Explain A federal agency that insures the vested benefits of pension plan participants (established in 1974 by the ERISA legislation
  • Definition Participation certificates (PC) Explain Investments representing an interest in a pool of funds or in other instruments, such as foreign securities, that allow participation in
  • Definition Prospective Earnings Growth (PEG Ratio) Explain sources such as Institutional Brokers' Estimate System (IBES), First Call, or Zach's. Growth is forecast of earnings minus
  • Definition Preferred equity redemption stock (PERC) Explain Preferred stock that converts automatically into equity at a stated date. A limit is placed on the value of the shares the investor receives
  • Definition PERLS Explain Principal Exchange-Rated-Linked Securities
  • Definition Philadelphia Stock Exchange (PHLX) Explain A securities exchange trading American and European foreign currency options on spot exchange rates
  • Definition Paris Interbank Offer Rate (PIBOR) Explain The deposit rate on interbank transactions in the Eurocurrency market quoted in Paris
  • Definition Payment-in-kind (PIK) bond Explain A bond that gives the issuer an option (during an initial period) either to make coupon payments in cash or in the form of additional bonds

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Payment-In-Kind (Pik) Bond, Paris Interbank Offer Rate (Pibor), Philadelphia Stock Exchange (Phlx), Perls, Preferred Equity Redemption Stock (Perc

Payment-In-Kind (Pik) Bond, Paris Interbank Offer Rate