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 Bourse Paris Explain National stock market of France
  • Definition Debt Public Explain Issues of debt by governments to compensate for a lack of tax revenues
  • Definition Provision Put 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 Accounting Purchase 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 Agreement Purchase Explain Used in connection with project financing; an agreement to purchase a specific amount of project output per period
  • Definition Fund Purchase Explain Resembles a sinking fund, except that money is used to purchase bonds only if they are selling below their par value
  • Definition Loan Purchase Explain A consumer loan taken to finance a purchase
  • Definition Mortgage Money Purchase 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 Order Purchase Explain A written order to buy specified goods at a stipulated price
  • Definition Sale And Purchase 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 Power Purchasing 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 Parity Power Purchasing Explain domestic and foreign price levels should equal the equilibrium exchange rate between domestic and foreign currencies
  • Definition Risk Power Purchasing Explain Related: Inflation risk
  • Definition Bond Discount Pure 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 Theory Expectations Pure Explain rates exclusively represent the expected future rates. In other words, the entire term structure reflects the market's expectations of
  • Definition Fund Index Pure Explain A portfolio that is managed so as to perfectly replicate the performance of the market portfolio
  • Definition Monopoly Pure 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 Play Pure Explain A company involved in only one line of business
  • Definition Pure yield pickup swap Explain Moving to higher yield-bonds
  • Definition Loan Purpose Explain A loan that is backed by securities and that is used to buy other securities under certain government regulations
  • Definition Statement Purpose 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 Bond Put 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 Parity Call Put 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 Date Maturity Projected 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 Ratio Call Put Explain traded to the volume of call options traded, which is used as an indicator of investor sentiment (bullish or bearish
  • Definition Letter Guarantee Put Explain the person writing a put option has sufficient funds in an account to cover the exercise price if required
  • Definition Option Put 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 Option An Put Explain To exercise a put option
  • Definition Price Put 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 Seller To Put Explain Exercise a put option; require that the option writer to purchase the stock at the strike price
  • Definition Swaption Put 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 Covenant Protective 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 Feature Call Provisional 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 Contest Proxy Explain which a dissident group seeks, from the firm's other shareholders, the right to vote those shareholders' shares in favor of the
  • Definition Fight Proxy 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 Statement Proxy Explain shareholders with information necessary to vote in an informed manner on matters to be brought up at a stockholders' meeting. Includes
  • Definition Vote Proxy Explain Vote cast by one person or entity on behalf of another
  • Definition Rule Man Prudent Explain A common law standard against which those investing the money of others (fiduciaries) are judged
  • Definition S P Explain statement provided by the broker showing change in the customer's net ledger balance after the offset of any previously established
  • Definition Rate Prepayment Psa 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 Partnership Limited Public Explain number of partners that is registered with the SEC and is available for public trading by broker/dealers
  • Definition Price Offering Public Explain The price of a new issue of securities at the time that the issue is offered to the public
  • Definition Ownership Public Explain The portion of a company's stock that is held by the public
  • Definition Bond Purpose Public 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 Warehouse Public Explain Storage facility operated by an independent warehouse company on its own premises
  • Definition Held Publicly Explain Describes a company whose stock is held by the public, whether individuals or business entities
  • Definition Assets Traded Publicly 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 Distribution Probability Explain values a random variable can take and the probability associated with each. Also called a probability function
  • Definition Function Probability Explain A measure that assigns a likelihood of occurrence to each and every possible outcome
  • Definition Sale Proceeds 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 Cycle Product Explain The time it takes to bring new and/or improved products to market
  • Definition Risk Product 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 Commitment Flow Production Explain An agreement by the loan purchaser to allow a monthly loan quota to be delivered in batches
  • Definition Financing Payment Production 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 Rate Production 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 Seller Buyer Profile 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 Center Profit Explain A division of an organization held responsible for producing its own profits
  • Definition Forecast Profit Explain A prediction of future profits of a company, which may affect investment decisions
  • Definition Margin Profit 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 Plan Sharing Profit 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 Index Profitability Explain The present value of the future cash flows divided by the initial investment. Also called the benefit-cost ratio
  • Definition Ratios Profitability Explain performing. Profit margins measure performance with relation to sales. Rate of return ratios measure performance relative to some measure
  • Definition Trades Program 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 Payments Progress Explain contractor, or subcontractor for work as it is completed as desired, in order to reduce working capital requirements
  • Definition Review Progress Explain A periodic review of a capital investment project to evaluate its continued economic viability
  • Definition System Tax Progressive 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 Financing Project Explain A form of asset-based financing in which a firm finances a discrete set of assets on a stand-alone basis
  • Definition Link Project Explain An econometric model forecasting and describing the effects of changes in different economies on other economies
  • Definition Loans Project Explain mortgages on multiple-family housing complexes, nursing homes, hospitals, and other special development
  • Definition Securities Loan Project 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 Note Promissory Explain Written pledge to pay
  • Definition Inventory Property Explain A list of personal property with corresponding values and initial costs often used to substantiate insurance claim and tax losses
  • Definition Rights Property Explain own and use property as they see fit and to receive the stream of income that their property generates
  • Definition Tax Property Explain A tax levied on real property based on its use and its assessed value
  • Definition Representation Proportional Explain allows minority shareholders and groups of small shareholders to have a better chance of getting representation on a board of directors
  • Definition Trading Proprietary 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 Index Weighted Price Explain An index giving a greater influence to higher-valued stocks by weighting all component stocks by their price
  • Definition Equity Of Prices 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 Out Priced 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 Efficiency Pricing Explain market characteristic that prices at all times fully reflect all available information that is relevant to the valuation of securities
  • Definition Dealer Primary Explain Usually refers to the select list of securities firms that are authorized to deal in new issues of government bonds
  • Definition Distribution Primary 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 Market Primary Explain Where a newly issued security is first offered. All subsequent trading of this security occurs is done in the secondary market
  • Definition Offering Primary 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 Paper Prime Explain The highest-quality, investment-grade debt of corporations as decided by rating agencies such as Moody's
  • Definition Rate Prime Explain to their best (prime) customers. More often than not, a bank's most creditworthy customers borrow at rates below the prime rate
  • Definition Fund Rate Prime Explain A mutual fund that buys portions of corporate loans from banks and pays the interest to shareholders
  • Definition Security Primitive 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 Relationship Agent Principal Explain Occurs when one person, an agent, acts on the behalf of another person, the principal
  • Definition Amount Principal 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 Stockholder Principal Explain the voting stock of a company. Such stockholders must report all trading in the stock to the SEC pursuant insider trading rules
  • Definition Diversification Of Principle 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 Bond Lien Prior Explain A bond usually arising from reorganization with precedence over another bond of the same issuing company that is equally secured
  • Definition Stock Preferred Prior Explain Preferred stock that has a higher claim on all dividends and assets in liquidation than claims of other preferred stock
  • Definition Placement Private Explain directly to a limited number of investors. For example, sale of stocks, bonds, or other investments directly to an institutional investor
  • Definition Ruling Letter Private Explain A ruling by the IRS in response to a request for interpretation of a tax law
  • Definition Partnership Limited Private 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 Bond Purpose Private Explain A municipal bond allowing more than 10% of the proceeds go to private activities
  • Definition Transfers Unrequited Private 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 Statement Forma Pro 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 Function Density Probability 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 Order Presale 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 Value Present 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 Factor Value Present 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 Issue Sold Pre 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 Benchmarks Trade Pre Explain Prices occurring before or at the decision to trade
  • Definition Method Balance Previous Explain Method of calculating finance charges based on the account balance at the end of the previous month
  • Definition Admission Of Price 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 Ratio Book Price Explain the value of total assets less total liabilities (book value). Determined by dividing current stock price by common stockholder equity per
  • Definition Change Price Explain Increase or decrease in the closing price of a security compared to the previous day's closing price
  • Definition Compression Price Explain appreciation potential for a callable bond in a declining interest rate environment, based on the expectation that the bond will be
  • Definition Process Discovery Price Explain The process of determining the prices of assets in the marketplace through the interactions of buyers and sellers
  • Definition Ratio Earnings Price Explain a stock sells. Determined by dividing current stock price by current earnings per share (adjusted for stock splits). Earnings per share
  • Definition Elasticities Price 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 Gap Price 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 Costs Impact Price 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 Leadership Price Explain A price charged by the dominant producer that becomes the price adopted by all the other producers
  • Definition Momentum Price Explain Related: Relative strength
  • Definition Persistence Price Explain Related: Relative strength
  • Definition Range Price Explain The interval between the high and low prices over which a stock has traded over a particular period of time
  • Definition Risk Price 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 Ratio Sales Price 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 Spread Price Explain buying and selling two options on the same security with the same expiration month, but with different exercise prices
  • Definition Support Price Explain Government intervention to set an artificially high price through the use of a price floor designed to aid producers
  • Definition Takers Price Explain Individuals who respond to rates and prices by acting as though prices have no influence on them
  • Definition Relationship Volume Price Explain technical analysts that signals continuing rises or falls in security prices that are related to changes in volume traded
  • Definition Curve Yield Positive Explain higher than short-term debt rates (because of the increased risk involved with long-term debt security
  • Definition Corporation Possessions 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 Audit Post Explain A set of procedures for evaluating a capital budgeting decision after the fact
  • Definition Check Dated Post Explain A check that becomes payable and negotiable on a future date specified
  • Definition Option Postponement Explain The option of deferring a project without eliminating the possibility of undertaking it
  • Definition Income Postponing Explain Purposely delaying receipt of income to a later year in order to reduce current tax liability
  • Definition Benchmarks Trade Post 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 Clean Is Pot Explain Phrase used when managing underwriter has sold the entire pot
  • Definition Attorney Of Power 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 Trading Prearranged 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 Motive Precautionary 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 Metals Precious 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 Right Preemptive 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 Stock Preference Explain preferred stock but senior to common stock in the right to receive payments from the firm; essentially junior preferred stock
  • Definition Coverage Dividend Preferred Explain Net income after interest and taxes (before common stock dividends) divided by preferred stock dividends
  • Definition Theory Habitat Preferred 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 Stock Preferred 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 Agreement Stock Preferred Explain A contract for preferred stock
  • Definition Ratio Stock Preferred 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 Prospectus Preliminary Explain An initial or tentative version of a prospectus
  • Definition Bond Premium Explain A bond that is selling for more than its par value
  • Definition Income Premium Explain The income received by an investor who sells an option
  • Definition Raid Premium Explain of a company's stock to gain control by offering stockholders a premium over the market value for their shares
  • Definition Bankruptcy Prepackaged 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 Interest Prepaid 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 Penalty Prepayment Explain A fee a borrower pays a lender when the borrower repays a loan before its scheduled time of maturity
  • Definition Speed Prepayment 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 Bond Prerefunded Explain Refunded bond
  • Definition Allocation Asset Policy Explain assess an appropriate long-term normal mix of assets that represents an ideal blend of controlled risk and enhanced return
  • Definition Limit Policy Explain The maximum dollar amount of coverage provided by an insurance company for a certain policy
  • Definition Loan Policy 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 Bonds Loan Policyholder Explain policyholders that are secured by the cash surrender value of the policies, and are offered by a broker/dealer as bonds
  • Definition Risk Political 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 Factor Pool Explain divided by the original principal balance with the result expressed as a decimal. Pool factors are published monthly by the Bond Buyer
  • Definition Interests Of Pooling 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 Beta Portfolio 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 Management Portfolio Explain Related: Investment management
  • Definition Set Opportunity Portfolio Explain The expected return/standard deviation pairs of all portfolios that can be constructed from a given set of assets
  • Definition R2 Portfolio 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 Trading Program Explain programs, usually entered directly from the trader's computer in to the market's computer system and executed automatically
  • Definition Theorem Separation Portfolio Explain of a risky investment portfolio is separate from his attitude towards risk. Related: Fisher's separation theorem
  • Definition Rate Turnover Portfolio Explain For an investment company, an annualized rate found by dividing the lesser of purchases and sales by the average of portfolio assets
  • Definition Variance Portfolio 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 Building Position 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 Diagram Position Explain Diagram showing the possible payoffs from a derivative investment
  • Definition Limits Position Explain position available in any one future or option contract for a given institution. For bona fide futures hedgers, there are no position
  • Definition Self Position Explain Used in the context of general equities. Going long or short in anticipation of a stock's movement
  • Definition Sheet Position 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 Trader Position Explain term approach in maintaining positions in the market and does not close out of these positions until close to the delivery date
  • Definition Carry Positive Explain Related: Net financing cost
  • Definition Convexity Positive 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 Registration Piggyback 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 Sheets Pink 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 Committee Pit 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 L P 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 Ratio Placement Explain municipal bond offerings that have been bought from the underwriters, according to the Bond Buyer newspaper
  • Definition Vanilla Plain Explain simple derivative financial instrument, usually a swap or other derivative that is issued with standard features
  • Definition Participants Plan Explain Employees or other beneficiaries who are eligible to receive benefits from a company's employee benefit plan
  • Definition Reorganization For Plan Explain A plan for reorganizing a firm during the Chapter 11 bankruptcy process
  • Definition Sponsors Plan 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 Program Financing Planned 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 Horizon Planning 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 Market The Playing Explain Trading in high, uncalculated risk usually refers to actions of amateur investors
  • Definition Back Plow Explain To reinvest earnings in a business rather than pay out them out as dividends. Common practice in high-growth companies
  • Definition Rate Plowback Explain Related: Retention rate
  • Definition Plug Explain A variable that handles financial slack in the financial plan
  • Definition Company Parent 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 Manager Portfolio Explain Professional responsible for the securities portfolio of an individual or institutional investor, such as a mutual fund, pension fund
  • Definition Seller Tick Plus 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 Pill Poison 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 Put Poison Explain A covenant allowing the bondholder to demand repayment in the event of a hostile takeover
  • Definition Evaluation Performance Explain results, which involves, first, determining whether the money manager added value by outperforming the established benchmark (performance
  • Definition Fund Performance Explain A growth-oriented mutual fund investing in growth stock and performance stock with low dividends and high risk
  • Definition Measurement Performance Explain Calculation of the return a money manager realizes over some time interval
  • Definition Shares Performance Explain the basis of performance as measured by earnings per share and similar criteria. A control device shareholders sometimes use to tie
  • Definition Stock Performance Explain retains earnings for further growth and therefore pays no dividends, but that an investor feels has significant future potential
  • Definition Annuity Certain Period Explain An annuity that provides guaranteed payments to an annuitant for a specified period of time
  • Definition Digestion Of Period 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 Plan Payment Periodic 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 Rate Periodic 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 Financing Permanent Explain Long-term financing using either debt or equity
  • Definition Spread Perpendicular Explain Option strategy involving the purchase of options with similar expiration dates and different exercise prices
  • Definition Bond Perpetual Explain Nonredeemable bond with no maturity date that pays regular interest rates indefinitely
  • Definition Inventory Perpetual Explain Recordkeeping system in which book inventory is updated daily
  • Definition Warrants Perpetual 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 Floater Article Personal Explain Insurance policy attachment designed to cover specified personal valuables
  • Definition Exemption Personal Explain Amount of money a taxpayer can exclude from personal income for each member of the household in calculation of a tax obligation
  • Definition Income Personal Explain Total income received from all sources, including wages, salaries, or rents, and the like
  • Definition Rate Inflation Personal Explain The inflation rate as it affects a specific individual
  • Definition Property Personal 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 Trust Personal Explain An interest in an asset held by a trustee for the benefit of another person
  • Definition Income Phantom Explain Income from a limited partnership that creates taxability without generating cash flow
  • Definition Plan Stock Phantom 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 Exchange Stock Philippine Explain Stock exchange based in the Philippines, which operates two trading floors, at Manila and Makati
  • Definition Curve Phillips Explain relationship between inflation and unemployment. It is conjectured that there is a simple trade-off between inflation and unemployment
  • Definition Switching Phone 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 Verification Physical Explain A procedure auditors use to ensure that inventory recorded in the book is correct by actually checking out the physical inventory
  • Definition I P 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 Bond Pickup 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 Netting Payments 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 Pattern Payments 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 Diagram Payoff Explain In option pricing, a graph of the value of the option position at expiration as a function of the underlying asset price
  • Definition Ratio Payout Explain paid out to the common stockholders as cash dividends. More specifically, the firm's cash dividend divided by the firm's earnings
  • Definition Ratio E P 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 Effect E P 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 Clause Penalty 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 Stock Penny 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 Fund Pension Explain A fund set up to pay the pension benefits of a company's workers after retirement
  • Definition Parachute Pension Explain the event of a hostile takeover attempt, any excess pension plan assets can be used to benefit pension plan participants. This prevents
  • Definition Plan Pension Explain A fund that is established for the payment of retirement benefits
  • Definition Reversion Pension Explain Termination of an overfunded defined benefit pension plan and replacement of it with a life insurance company-sponsored fixed annuity plan
  • Definition Sponsors Pension 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 Pill People Explain A form of poison pill providing that the entire management threatens to resign in the event of a takeover
  • Definition Debt Capita Per Explain The total bonded debt of a municipality divided by the population of the municipality
  • Definition Double To Percent Explain Percentage that the stock price has to rise (fall) to double the price of the call (put
  • Definition Premium Percentage Explain Applies mainly to convertible securities. Premium over parity of a convertible bond divided by parity
  • Definition Market Capital Perfect Explain A market in which there are never any arbitrage opportunities
  • Definition Competition Perfect Explain An idealized market environment in which every market participant is too small to affect the market price by acting on its own
  • Definition Hedge Perfect 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 Lien First Perfected 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 Analysis Attribution Performance 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 Bond Performance 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 Dividend Participating Explain Dividend received from ownership of participating preferred stock
  • Definition Fees Participating Explain The portion of total fees in a syndicated credit that go to the participating banks
  • Definition Gic Participating 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 Stock Preferred Participating Explain Preferred stock that provides the holder with a specified dividend plus the right to additional earnings under specified conditions
  • Definition Loan Participation 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 Agreement Partnership Explain A written agreement among partners detailing the terms and conditions of participation in a business ownership arrangement
  • Definition Book The Pass 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 Rate Through Pass Explain The net interest rate passed through to investors after deducting servicing, management, and guarantee fees from the gross mortgage coupon
  • Definition Securities Through Pass 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 Bond Passive 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 Investing Passive Explain Putting money into a profitable business opportunity that is deemed passive by the IRS and thus benefits from tax deductions
  • Definition Portfolio Passive Explain A market index portfolio
  • Definition Strategy Portfolio Passive 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 Option Dependent Path 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 Play To Pay 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 Up Pay 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 Drafts Through Payable 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 Down Pay 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 Agent Paying Explain An agent who makes principal and interest payments to bondholders on behalf of the issuer
  • Definition Date Payment Explain The date on which shareholders of record will be sent a check for the declared dividend
  • Definition Float Payment 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 Pn Notes Project Explain finance federally sponsored programs in urban renewal and housing and guaranteed by the U.S. Department of Housing and Urban Development
  • Definition Po Only Principal 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 Bond Pac 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 Exchange Stock Pacific 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 Strategy Man Pac Explain prospective acquiree retaliates against the acquirer's tender offer by launching its own tender offer for the other firm
  • Definition Mortgage Package Explain A mortgage on a house and property in the house
  • Definition Capital In Paid Explain exchange for stock, but not stock from capital generated from earnings or donated. This account includes capital stock and contributions of
  • Definition Up Paid Explain When all payments that are due have been made
  • Definition Policy Up Paid Explain A life insurance policy in which all premiums that are due have been paid
  • Definition Tape The Painting 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 Off Paired 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 Shares Paired 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 Dealer Paper Explain A brokerage firm that buys and sells commercial paper to make a profit
  • Definition Loss Gain Paper Explain Unrealized capital gain (loss) on securities held in a portfolio based on a comparison of current market price to original cost
  • Definition Insurance Portfolio 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 Bond Par Explain A bond trading at its face value
  • Definition Value Par 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 Loan Parallel 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 Method Purchase Explain market value for the consolidation of the two entities' net assets on the balance sheet. Generally, depreciation/amortization will
  • Definition Value Parity 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 Management Investment Passive Explain Buying a well diversified portfolio to represent a broad-based market index without attempting to search out mispriced securities
  • Definition Seller Buyer Participating 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 Pac Checks Preauthorized 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 Pc Certificates Participation 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