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Terms starting with 'P'
P
A NASDAQ stock symbol specifying that it is the company's first class of preferred shares.

PAB
In currencies, this is the abbreviation for the Panamanian Balboa.

Pac Man
A form of defense used in a hostile takeover situation. The target firm turns around and tries to take over the company that has made the hostile bid.

Pacific Exchange - PCX
An exchange network that coordinates the exchange of stock options between both institutional and individual investors.

Paid in Capital
Capital received from investors in exchange for stock. This is recorded as an entry on the balance sheet.

Paid-Up
The state of a settlement when all payment obligations for a security has been completed.

Paid-Up Capital
The total amount of shareholder capital that has been paid in full by shareholders.

Painting the Tape
An illegal action committed by a group market manipulators buying and selling a security among themselves to create artificial trading activity, which, when reported on the ticker tape, lures in unsuspecting investors as they perceive an unusual volume.

Paired Shares
Stock of two companies under the same management that is sold as one unit and usually appears on one certificate.

Pairing Off
An illegal process whereby brokerage firms offset short and long positions between house accounts by collecting cash payments without physically delivering the securities.

Pairoff
A purchase of securities to offset a previously transacted sale of the same security.


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Pairs Trade
The strategy of matching a long position with a short position in two stocks in the exact same sector. This creates a hedge against the sector and the overall market that the two stocks are in. The hedge created is essentially a bet that you are placing on the two stocks; the stock you are long in versus the stock that you are short in.

Palladium
An element commonly used in jewelry, electronics, and the purification of hydrogen.

Panel Bank
The name given to the group of banks contributing to the EURIBOR. This group is made up of the largest participants within the Euro money market.

Panic Buying
High volume buying brought about by sharp price increases.

Panic Selling
High volume selling brought about by sharp price declines.

Paper Profit (Paper Loss)
Unrealized capital gain (or capital loss) in an investment. It is calculated by comparing market price of the security to the original purchase price. Gains or losses only become realized when the security is sold.

Paper Trade
Hypothetical trading that occurs when investors mimic trades (buys and sells) without actually entering into any monetary transactions.

Par
1. The face value of a bond. Generally $1,000 for corporate issues, with higher denominations such as $10,000 for many government issues.

2. A dollar amount assigned to a security when first issued.

Par Value
1. The face value of a bond.

2. A dollar amount that is assigned to a security when representing the value contributed for each share in cash or goods.

Parabolic Indicator
A technical analysis strategy that uses a trailing stop and reverse method called "SAR," or stop-and-reversal, to determine good exit and entry points.


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Parent Company
A company that controls other companies by owning an influential amount of voting stock.

Pareto Principle
A theory presented by economist Vilfredo Pareto describing an unequal relationship between outputs and inputs.

Pari-passu
Two securities or obligations having equal rights to payment.

Paris Club
A monthly meeting, taking place in Paris, between the creditors of 19 countries for the purpose of discussing debt issues. Among other things, the Paris Club addresses the issue of coordinated debt relief for developing countries that cannot service their debt.

Parity
A situation in an exchange market where all brokers bidding for the same security have equal standing due to identical bids.

Parity Bond
Two or more bond issues with equal rights to bond payments and pledged revenues.

Parking
A form of kiting shares whereby brokerage firms will move long positions in unrelated accounts to cover short positions that are improperly settled according to SEC regulations.

Parking Violation
The illegal practice of an acquiring company holding stock under a related third party for the sole purpose of concealing ownership of the target company before attempting corporate takeover.

Parsonage Allowance
An allowance for designated church professionals (clergy) for the expenses of providing and maintaining a home.

Partial Release
A mortgage provision allowing some of the pledged collateral to be released from the mortgage contract if certain conditions are met.


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Participating Preferred Stock
A type of preferred stock that, under certain conditions, gives holders the right to receive earnings payouts over and above the specified dividend rate.

Participation Rate
A measure of the participating portion of an economy's labor force who are of working-age.

Partnership
A business organization in which two or more individuals manage and operate the business. Both owners are equally and personally liable for the debts from the business.

Pass Through Security
A pool of fixed income securities backed by a package of assets. A servicing intermediary collects the monthly payments and, after deducting a fee, remits or passes them through to the holders of the pass through security.

Pass-Through Certificate
Fixed-income securities that represent an undivided interest in a pool of federally insured mortgages put together by the Government National Mortgage Association (Ginnie Mae).

Passive Activity
An activity from which you have the potential to profit but in which you do not physically participate.

Passive Foreign Investment Company - PFIC
A foreign company whose income is 75% passive or has over 50% of its assets in investments earning interest, dividends, and/or capital gains.

Passive Income
Earnings an individual derives from a rental property, limited partnership, or other enterprise in which he or she is not actively involved.

Passive Investing
An investment strategy involving limited ongoing buying and selling actions. Passive investors will purchase investments with the intention of long-term appreciation and limited maintenance.

Passive Loss
A loss incurred through a rental property, limited partnership, or other enterprise in which the individual is not actively involved.


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Passive Management
An investing strategy that mirrors a market index and does not attempt to beat the market. Also known as "passive strategy" or "passive investing."

Past Due Balance Method
A finance/accounting method that bases costs (and interest) on the amounts owing that are past due.

Patent
A government license that gives the holder exclusive rights to a process, design, or new invention for a designated period of time.

Path Dependent Option
An exotic option that is valued according to pre-determined price requirements for its underlying asset or commodity.

Pay/Collect
An abbreviated reference to the payment or collection of funds (after futures positions have been marked to market) between clearing members and their respective clearing houses.

Payback Period
The length of time required to recover the cost of an investment.Calculated as:
Illustration for Payback Period

Paydown
The process of repaying a portion of an outstanding loan balance.

Paydown Factor
Each month a portion of cash is subtracted from the principal of a mortgage security. This amount is then divided by the original principal of the security and is reported as the paydown factor.

Payee
A party who receives payment.

Payer
A person who makes a payment to a payee.


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Paying Agent
An agent who accepts payments from the issuer of a security and then distributes the payments to the holders of the security.

Payment Date
The date on which a declared stock dividend is scheduled to be paid.

Payment in Kind
When a good or service is used as payment, as opposed to cash.

Payment in Kind Bonds - PIK
A type of bond that pays interest in additional bonds, as opposed to cash payouts.

Payout Ratio
The percentage of earnings paid out in dividends. It is calculated by dividing dividends per share by earnings per share.

Payroll Tax
A tax which is solely based on your wages or salary. These taxes can be used to collect federal, state, and municipal payroll taxes.

Peer-to-Peer, Path to Profitability, P to P
P2P can mean one of two things:

Pegging
1. A method of stabilizing a country's currency by fixing its exchange rate to that of another country.

2. A practice of buying large amounts of an actual commodity or security underlying an option close to its expiry date. This is done for the purpose of facilitating a rise in market price.

PEN
In currencies, this is the abbreviation for the Peruvian Nuevo Sol.

Penalty Bid
A penalty bid is intended to facilitate a securities offering by stabilizing its price during the distribution period. This bid is typically entered by the managing underwriter on behalf of a syndicate.


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Penny Stock
A stock that sells for less than $1 a share but may also rise to as much as $10/share as a result of heavy promotion. All penny stocks are traded OTC or on the pink sheets.

Pension Adjustment - PA
The amount of contributions that can be made to a Registered Retirement Savings Plan (RRSP) on top of any contributions to a Registered Pension Plan (RPP) in a given year.

Pension Benefit Guaranty Corporation - PBGC
A non-profit, federally-created corporation that, guarantees payment of certain pension benefits under defined benefit plans which are terminated with insufficient money to pay benefits.

Pension Plan
A retirement plan, usually tax exempt, wherein the employer makes contributions for the employee. Many pension plans are being replaced by the 401K.

Pension Shortfall
A situation wherein a company offering employees a defined benefit pension plan does not have enough money set aside to meet the pension obligations to employees who will be retired in the future.

People Pill
A defensive strategy to ward off a hostile takeover. Management threatens that, in the event of a takeover, the entire management team will resign.

Per Capita
A Latin term that translates into "by head," basically meaning "average per person."

Per Stirpes
A stipulation that, should a beneficiary predecease the testator, the beneficiaryís share of the inheritance will go to his or her heirs.

Perfect Competition
A market structure in which:

Performance Bond
A bond issued to one party of a contract as a guarantee against the failure of the other party to meet obligations specified in the contract.


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Performance Index Paper - PIP
A short term obligation in which the rate on the paper is denominated and paid in a base currency. However, the rate movement is based on the exchange rate with an alternate currency.

Performance Shares
Shares of company stock that are given to managers only if certain performance criteria is met.

Perp Walk
A slang term describing the police action of parading an arrested suspect in handcuffs before the media.

Perpetual Bond
A bond with no maturity date. Perpetual bonds are not redeemable, instead they pay a steady stream of interest forever.

Perpetual Inventory
An accounting method of maintaining up-to-date property records that accurately reflect the level of goods on hand.

Perpetuity
A constant stream of identical cash flows with no end.  The formula for determining the present value of a perpetuity is as follows:
Illustration for Perpetuity

Personal Consumption Expenditures - PCE
Similar to CPI, PCE is a report (actually a part of the personal income report) put out by the Bureau of Economic Analysis of the Department of Commerce.

Personal Equity Plan - PEP
An investment plan in the U.K. that used to allow people over the age of 18 to invest in shares of U.K. companies. It was done through an approved plan, qualifying unit trust, or investment trust.  Investors received both income and capital gains free of tax.  

Personal Finance
Financial planning for individuals. Generally, it involves analyzing their current financial position, predicting short-term and long-term needs, and recommending a financial strategy. This may involve advice on pensions, school fees, mortgages, life insurance, and investments.

Personal Income
An individual's total earnings coming from wages, business enterprises, and various investments.


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Personal Property
Physical assets that are not fixed permanently to realty. Mobile property like equipment, vehicles, collectibles and inventory are examples of personal property.

Personal Use Property
Property that an individual does not use for business purposes, nor is it held as an investment.

Petrodollars
The money that oil exporters receive from selling oil and then deposit into Western banks.

Petty Cash
The small amount of cash and coins that an organization uses for minor purchases and for providing change to customers.

PGK
In currencies, this is the abbreviation for the Papua New Guinea Kina.

Phantom Stock Plan
An employee benefit plan that gives selected employees (senior management) many of the benefits of stock ownership without actually giving them any company stock. Sometimes referred to as "shadow stock."

Philadelphia Federal Index
A regional federal reserve bank index measuring the change in business growth. Participants voluntarily answer surveys regarding the direction of change in their overall business activities.

Philadelphia Semiconductor Index - SOX
A price-weighted index composed of 18 U.S. semiconductor companies primarily involved in the design, distribution, manufacture, and sale of semiconductors.

Philadelphia Stock Exchange - PHLX
The first stock exchange to be formed in the United States.

Phillips Curve
An economic concept developed by A. W. Phillips stating that inflation and unemployment have a stable and inverse relationship.


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PHP
In currencies, this is the abbreviation for the Philippine Peso.

Pickup
A gain in yield made by selling one bond and buying another. Also referred to as "yield pickup."

Piggy Back Registration
When an underwriter allows existing holdings of a company's shares to be sold in conjunction with an offering of new public shares.

Piggyback Warrants
Additional warrants that are acquired following the exercise of primary warrants.

Pink Sheets
A daily publication compiled by the National Quotation Bureau containing price quotations for over-the-counter stocks. Unlike companies on a stock exchange, companies quoted on the pink sheets system are not required to meet minimum requirements or file with the SEC.

Pinning the Strike
The tendency of a stock's price to close near the strike price of heavily traded options (in the same stock) as the expiration date approaches.

Pip
When referring to listed equities, it is the smallest denomination of a currency.

Pit
A specific area of the trading floor that is designated for the trading of an individual futures or options contract.

Pivot
A price level established as being significant either by the market's failure to penetrate it or when a sudden increase in volume accompanies the move through the price level.

Pivot Point
A technical indicator derived by calculating the numerical average of a particular stock's high, low and closing prices.


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PKR
In currencies, this is the abbreviation for the Pakistani Rupee.

Placement
To market new securities to the private or public sector.

Platinum
An element that is sometimes used in jewelry or as a catalyst in electronics.

Pledged Asset
An asset that is transferred to a lender for the purpose of securing debt. The lender of the debt maintains possession of the pledged asset, but does not have ownership unless default occurs.

PLN
In currencies, this is the abbreviation for the Polish Zloty.

Plunge Team
A colloquial reference to a group of economic leaders within the United States whose purpose is to ensure the nation's financial markets are efficient, competitive, and provide confidence for investors.

POC
This is what most stocks are a "Piece of Crap"

Point & Figure Chart
A chart that plots day-to-day price increases and declines. Increases are represented by a rising stack of Xs, and decreases are represented by a declining stack of Os.

Point Balance
A statement, typically produced at the end of the calendar month, indicating the profits and losses of a client on open futures contracts.

Points
1. When refinancing or taking out a loan/mortgage, each point is equal to one percent over and above the current interest rate.

2. For stocks, one point equals one dollar.


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Poison Pill
A strategy used by corporations to discourage a hostile takeover by another company. The target company attempts to make its stock less attractive to the acquirer. There are two types of poison pills:

1. A "flip-in" allows existing shareholders (except the acquirer) to buy more shares at a discount.

2. The "flip-over" allows stockholders to buy the acquirer's shares at a discounted price after the merger.

Policy Loan
A loan issued by an insurance company, it uses the cash value of a person's life insurance policy as collateral. Sometimes referred to as a "life insurance loan."

Political Risk
The financial risk that a country's government will suddenly change its policies.

Ponzi Scheme
A fraudulent scheme in which money from new investors is used to provide a return to previous investors.

POO
Price of Oil (POO)

Pooled Income Fund
Gifts to a mutual fund that are pooled and invested together. Income from the fund is distributed to the fundís beneficiaries according to their share of the fund. You, or other income recipients you choose, receive quarterly payments for life.

Pooling of Interests
An accounting method, used in mergers and acquisitions, where the balance sheet items of the two companies are simply added together.

Poop
A slang term often used to describe people with insider information.

Poop and Scoop
A highly illegal practice occurring mainly on the Internet: A small group of informed people attempt to push down a stock by spreading false information and rumors. If they are successful, they can purchase the stock at bargain prices.

Poopie
Sometimes spelled Poopy
Poopie means crappy but is a nicer way to say when ladies present


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Pop-Up Option
A joint and survivor option that allows you to be reinstated to the basic pension amount if the spouse predeceases the retiree. More and more companies are utilizing this option for an additional charge.

Pork Bellies
The commodities underlying the majority of futures contracts trading pork livestock.

Pork Chop
An arrangement on the floor of the NYSE whereby clerks cover the booth of a floor broker and accept orders, phone calls, and associated tasks.

Porter's 5 Forces
Named after Michael E. Porter, this model identifies and analyzes 5 competitive forces that shape every industry, and helps determine an industry's weaknesses and strengths.

Portfolio
The group of assets--such as stocks, bonds and mutuals--held by an investor,.

Portfolio Income
Income from investments, including dividends, interest, royalties, and capital gains.

Portfolio Insurance
A method of hedging a portfolio of stocks against the market risk by short selling stock index futures.

Portfolio Management
The art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk vs. performance.

Portfolio Manager
The person responsible for investing a mutual fund's assets, implementing its investment strategy, and managing the day-to-day portfolio trading.

Portfolio Runoff
A decrease in the value and size of portfolios investing in mortgages and mortgage backed securities.


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POS
-Price of Silver or
-Piece of Shit
You will be able to determine in what context its used especially if not referring to a silver company lol

Position
The amount of a security either owned (which constitutes a long position) or borrowed (which constitutes a short position) by an individual or by a dealer.

Position Limit
A predetermined position level set by regulatory bodies for a specific contract or option.

Position Sizing
The dollar value being invested into a particular security by individual investors.

Position Trader
A commodities trader who holds a long position for the long term.

Positive Carry
A strategy of holding two offsetting positions, one of which creates an incoming cashflow that is greater than the obligations of the other.

Positive Volume Index - PVI
An index that focuses on days where the volume has significantly increased from the previous day's trading.

Post-Money Valuation
The value of a company after external financing alternatives are added to its balance sheet.

Pot
The portion of a stock or bond issue that is returned to the underwriter by investment bankers in order to allow sales to institutional investors.

Pot is Clean
When an underwriter completely sells the "pot."


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Power of Attorney
Giving someone the ability to act on your behalf in specific instances.

Power Ratio
Measures a media company's revenue performance in comparison to the audience share they control. You need to know three numbers in order to make this calculation work:

Pre-Arranged Trading
Trading that occurs between brokers through an expressed or implied agreement or understanding.

Pre-Market
Trading done before the regular market opens.

Pre-Money Valuation
The value of a company before external financing alternatives are added to its balance sheet.

Pre-Syndicate Bid
A bid entered in the NASDAQ system to stabilize the price of a NASDAQ security prior to the effective date of a registered secondary offering.

Precious Metals
Valuable metals such as gold, iridium, palladium, platinum, and silver.

Preemptive Right
The right of a company's existing common shareholders to have the first chance to purchase shares in a company's future stock issuance.

Preferred Dividend Coverage Ratio
A ratio that measure the amount of money a company has at their disposal to pay dividends to the preferred shareholders.

Preferred Equity Redemption Stock - PERC
Preferred stock with special provisions limiting the value of its convertible shares and the mandatory redemption value at maturity.


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Preferred Redeemable Increased Dividend Equity Security - PRIDES
First introduced by Merrill Lynch, PRIDES are synthetic securities consisting of a forward contract to purchase the issuer's underlying security and an interest bearing deposit. Interest payments are made at regular intervals, and conversion into the underlying security is mandatory at maturity.

Preferred Stock
A class of ownership in a corporation with a stated dividend that must be paid before dividends to common stock holders. Preferred stock does not usually have voting rights.

Premium
1. The total cost of an option.

2. The difference between the higher price paid for a security and the security's face amount at issue.

Premium Bond
A bond that is valued at more than its face amount.

Premium Put Convertible
A convertible bond with an additional put feature that allows it to be redeemed at a premium sometime during its life.

Prepackaged Bankruptcy
When a company prepares a reorganization plan that is negotiated and voted on by creditors and shareholders before the company actually files for bankruptcy.

Prepaid Expense
An asset that arises on a balance sheet because of the payment of something in advance (prepayment). Services for the payment will be received in the near future.

Prepayment
1. The payment of a debt obligation prior to its due date.

2. The excess payment over a scheduled debt repayment amount.

Prepayment Risk
The uncertainty related to unscheduled prepayment in excess of scheduled principal repayment.

Present Value - PV
The amount that a future sum of money is worth today given a specified rate of return.


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Preservation of Capital
An investment strategy with which the primary goal is to prevent the loss of money.

Presidential Election Cycle (Theory)
A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a new U.S. president, and then after the first year, the market improves until the next presidential election.

Press Release
If it's an earnings press release, the release will discuss the financial results of the company for the recently completed quarter and may provide comments from management. Press releases often list valuable contact information that can assist you in your research, such as the company's web address.

Previous Balance Method
A finance/accounting method that bases costs (and interest) on the amounts owing from the previous time period.

Previous Close
A security's closing price on the preceding day of trading.

Price Basing
A pricing method used by commodity producers, processors, merchants, and consumers whereby prices of commercial commodity transactions are based on related futures contract prices.

Price Discovery
A method of determining the price for a specific commodity through basic supply and demand factors related to the market.

Price Elasticity of Demand
A measure of the responsiveness of the quantity demanded of a good to a change in its price. It is calculated as:
Illustration for Price Elasticity of Demand

Price Fixing
Establishing the price of a product or service, rather than allowing it to be determined naturally through free market forces. This procedure is often an illegal practice.

Price Improvement
Attaining a higher bid price, if you are selling a stock, or a lower ask price, if you are buying a stock, than the price quoted at the time your order was placed.


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Price Maker
A monopoly or a firm within monopolistic competition that has the power to influence the price it charges as the good it produces does not have perfect substitutes.

Price Rate of Change - ROC
An inverse indicator of security price movements used to determine whether a stock has been overbought or oversold.

Price Risk
The risk that the value of a security or portfolio of securities will decline in the future.

Price Skimming
A product pricing strategy by which a firm charges the highest initial price that customers will pay. As the demand of the first customers is satisfied, the firm lowers the price to attract another, more price-sensitive segment.

Price Swap Derivative
An obligation made by one company to secure the declining value of another company's assets through the commitment of shares.

Price Taker
1. An investor whose buying or selling transactions are assumed to have no effect on the market.

2. A firm that can alter its rate of production and sales without significantly affecting the market price of its product.

Price Target
The projected price level as stated by an investment analyst or advisor.

Price Transparency
The ability to obtain information on the order flow for a particular stock. That is, to know the quantities of stock being offered and bid for at the various price levels. It is also referred to as market depth.

Price Value of a Basis Point - PVBP
A measure used to describe how a basis point change in yield affects the price of a bond.
Illustration for Price Value of a Basis Point - PVBP

Price-Earnings Ratio - P/E Ratio
A valuation ratio of a company's current share price compared to its per-share earnings.Calculated as:
Illustration for Price-Earnings Ratio - P/E Ratio


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Price-Earnings Relative
A stocks price-earnings ratio divided by the price-earnings ratio for a market measure, such as the S&P 500 index or Wilshire 5000.

Price-To-Book Ratio - P/B Ratio
A ratio used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value (Book value is simply assets minus liabilities).

Price-To-Cash-Flow Ratio
A measure of the market's expectations of a firm's future financial health. It is calculated by dividing the price per share by cash flow per share.

Price-to-Research Ratio
A measure of the relationship between a company's market capitalization and research and development (R&D) expenses.

Price-to-Sales Ratio
A technique for valuing a stock relative to its own past performance, other companies, or the market itself. It is calculated by dividing a stock's current price by its revenue per share. Also known as "PSR."

Price/Earnings to Growth - PEG Ratio
A ratio used to determine a stock's value while taking into account earnings growth. The calculation is as follows:
Illustration for Price/Earnings to Growth - PEG Ratio

Price/Earnings to Growth and Dividend Yield - PEGY Ratio
A variation of the PEG ratio where a stock's P/E ratio is divided by its projected earnings growth rate and dividend yield.

Price/Growth Flow
A measure formulated to identify companies that are producing solid earnings and investing a large amount in research and development (R&D). This measure is calculated as the following:
Illustration for Price/Growth Flow

Pricing Power
An economic term referring to the effect that a change in a firm's product price has on the quantity demanded of that product. Pricing power ties in with the "Price Elasticity of Demand."

Primary Distribution
The initial sale of the securities of a company or issuer.


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Primary Market
The market in which investors have the first opportunity to buy a newly issued security.

Prime Bank
This term usually describes the top 50 banks (or thereabouts) in the world. Prime banks trade instruments such as world paper, International Monetary Fund bonds, and Federal Reserve notes.

Prime Brokerage
A special group of services that many brokerages give to special clients. The services provided under prime brokering are securities lending, leveraged trade executions, and cash management, among other things. Prime brokerage services are provided by most of the large brokers, such as Goldman Sachs, Paine Webber, and Morgan Stanley Dean Witter.

Prime Rate
The interest rate that commercial banks charge their prime or most credit worthy customers, generally the large corporations.

Principal
1. The amount borrowed or the amount still owed on a loan, separate from interest.

2. The original amount invested, separate from earnings.

3. The face value of a bond.

4. The owner of a private company.

5. The main party to a transaction, acting as either a buyer or seller for his/her own account and risk.

Principal Orders
Refers a broker's/dealer's activity when buying or selling for their own account and risk.

Principal Protected Notes
A fixed income security that guarantees a minimum return equal to an investors initial investment (the principal amount).

Principal Residence
The primary location that a person inhabits. It doesn't matter whether it is a house, apartment, trailer, or boat, as long as it is where you live most of the time.

Print
To execute a trade. The name comes from the printing of the trade on the ticker tape.

Prior Preferred Stock
Preferred stock with a higher claim on assets and dividends than other issues of preferred stock.


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Private Activity Bond - PAB
Tax-exempt bonds issued by government organizations for the purpose of providing special financing benefits for qualified projects.

Private Banking
Beyond just providing credit or managing investments, private banking addresses your entire financial situation. Services include everything from protecting and growing your assets in the present, to planning retirement and passing wealth on to future generations.

Private Company
A company whose ownership is private and, thus, do not need to meet the strict SEC filing requirements of public companies.

Private Equity
When equity capital is made available to companies or investors, but not quoted on a stock market. The funds raised through private equity can be used to develop new products and technologies, to expand working capital, to make acquisitions, or to strengthen a company's balance sheet.

Private Investment, Public Equity - PIPE
This is when a private investment or mutual fund buys common stock for a company at a discount to the current market value per share.

Private Placement
Raising of capital via private rather than public placement. The result is the sale of securities to a relatively small number of investors.

Private Purpose Bond
Similar to a municipal bond, it is a tax-free bond which is used to finance private facilities and projects, rather than public ones.

Privatization
The transfer of ownership from government owned to a privately owned corporation.

Pro Bono
To work for the good of the public rather than for a profit or income.

Pro Forma
A latin term that translates into "for the sake of form." In the investing world, the term describes a method of calculating financial results in order to emphasize either current or projected figures.


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Pro Forma Earnings
"Pro forma" is a Latin term meaning "for the sake of form." Pro forma earnings are not derived by standard GAAP methods. Sometimes, pro forma earnings will be presented as part of a business plan and project earnings based on a set of assumptions.

Pro-rata
Used to describe a proportionate allocation.

Pro-Tanto
A Latin word for "only to that extent."

Problem Child
One of the four categories (quadrants) in the BCG growth-share matrix that represents the division within a company that has a small market share within a rapidly expanding industry.

Procurement
1. To attain possession of something, usually after exerting a substantial effort to do so.

2. The purchasing of something usually for a company, government or other organization.

Producer Price Index - PPI
A family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

Production Possibility Frontier - PPF
A curve depicting all maximum output possibilities of two or more goods given a set of inputs (resources, labor, etc.). The PPF assumes that all inputs are used efficiently.
Illustration for Production Possibility Frontier - PPF

Productivity
A measure of the amount of output per unit of input.

Profit
The same as net income: total earnings less expenses.

Profit and Loss Statement - P&L
The portion of a company's financial statements that summarizes revenues and expenses during a specific period of time.


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Profit Center
The branch or division of a company that creates profits individually and separately from the main organization.

Profit Margin
An indicator of profitability calculated as net earnings after taxes divided by revenues. Profit margin is usually displayed as a percentage.

Profit Sharing Plan
A plan wherein the employees get a share in the profits of the company. The company decides what portion of the profit will be shared. Each employee then receives, into an account, a percentage of those profits based on their earnings. There are typically restrictions as to when and how you can withdraw these funds without penalties.

Profit Taking
The action of selling stock to cash-in on a sharp rise. This action pushes prices down temporarily.

Profit Warning
When a company advises its earnings won't meet analyst expectations.

Profitability Index
An index that attempts to identify the relationship between the costs and benefits of a proposed project through the use of a ratio calculated as:
Illustration for Profitability Index

Program Trading
Computerized trading used primarily by institutional investors, typically for large volume trades. Orders from the trader's computer are entered directly into the market's computer system and executed automatically.

Progressive Tax
A tax that takes a larger percentage from the income of high-income people than it does from low-income people.

Project Finance
Defined by the International Project Finance Association (IPFA) as the following: The financing of long-term infrastructure, industrial projects and public services based upon a non-recourse or limited recourse financial structure where project debt and equity used to finance the project are paid back from the cashflow generated by the project.

Promissory Note
A written, dated, and signed two-party instrument containing an unconditional promise by the maker to pay a definite sum of money to a payee on demand or at a specified future date.


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Property
A legally owned possession or real estate.

Property Tax
A tax assessed on real estate by the local government. The tax is usually based on the value of property (including the land) you own.

Property, Plant, and Equipment - PP&E
PPE stands for property, plant and equipment.

Proportional Tax
An income tax that takes the same percentage of income from everyone regardless of how much (or little) an individual earns.

Proprietary Trading
When a firm trades for direct gain instead of commission dollars. Essentially, the firm has decided to profit from the market rather than commissions from processing trades.

Proration
When the available cash/shares during a corporate action are not sufficient to satisfy the tendered offers by shareholders. Therefore, a proportion of both are granted to each offer tendered.

Prospectus
1. A formal legal document describing details of a corporation. The prospectus is generally created for a proposed offering (usually an IPO), but they can still be obtained from existing businesses as well. The prospectus includes company facts that are vitally important to potential investors.

2. In this case of mutual funds, a prospectus describes the fund's objectives, history, manager background, and financial statements.

Protected Fund
A type of segregated fund that is legally structured as a mutual fund and not regulated by insurance legislation.

Protectionism
Actions taken by a government to prevent imports from destroying domestic producers.

Protective Stop
A strategy that aims to limit potential losses to a desired amount by using a stop-loss or stop-limit order.


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Provisional Call Feature
A feature of a convertible issue that allows the issuer to call the issue during the non-call period if the stock reaches a certain price.

Proxy
A formal document signed by a shareholder to authorize another shareholder, or commonly the company's management, to vote the holder's shares at the annual meeting.

Proxy Fight
When a group of shareholders are persuaded to join forces and gather enough shareholder proxies to win a corporate vote. This is sometimes also referred to as a proxy battle.

Proxy Statement
A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting.

Proxy Tax
A tax on lobbying and/or political expenses that exceed an allowable amount set by the IRS.

Prudent Person Rule
A legal maxim that restricts the discretion in a client's account to investments only in those securities that a prudent person seeking reasonable income and preservation of capital might buy for his or her own investment.

Public
Assets that can be traded in a public market, such as the stock market.

Public Company
A company that has issued securities through an offering which are now traded on the open market.

Public Company Accounting Oversight Board - PCAOB
A non-profit organization that regulates auditors of publicly traded companies.

Public Elevator
A grain elevator willing to store the bulk grain of public clients for an associated fee.


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Public Income Notes - PINES
An unsecured unsubordinated debenture issued by a public company. PINES trade on a stock exchange, but also bear interest.

Public Limited Company - PLC
The standard legal form for a limited, public company in the UK.

Public Offering Price - POP
The price at which new issues are offered to the public by an underwriter.

Public Securities Association Standard Prepayment Model - PSA
An assumed monthly rate of prepayment that is annualized to the outstanding principal balance of a mortgage loan.

Public Unit Account
Accounts that carry funds provided by entities of the U.S. Government.

Publicly Traded Partnership
A limited partnership that also has interests traded in the equity securities market.

Puke
Slang for selling off a losing position even if the loss is substantial.

Pump and Dump
A highly illegal practice occurring mainly on the Internet. A small group of informed people buy a stock before they recommend it to thousands of investors. The result is a quick spike in the price followed by an equally quick downfall. The people who have bought the stock early sell off when the price peaks.

Punter
An investor who hopes to make quick profits. Basically, another term for speculator.

Purchase Acquisition
An accounting method used in mergers and acquisitions with which the purchasing company treats the target firm as an investment, adding the target's assets to its own fair market value.


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Purchase Fund
A feature of some bond indentures and preferred stock that requires the issuer to make an effort to purchase a specified amount of securities if they fall below a stipulated price (usually par value).

Purchase Price
A price which reflects the true cost of purchasing mutual fund shares or units.

Purchasing Managers' Index (PMI)
An indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries, and the employment environment.

Purchasing Power
The ability to purchase goods and services, or the amount of goods and services that one unit of money can buy. In investment terms, it is the dollar amount of credit available to a customer to buy additional securities against the existing marginable securities in the brokerage account.

Purchasing Power Parity - PPP
A theory stating that over the long term the exchange rate between two currencies adjusts to relative price levels, that is, relative purchasing power.

Pure Play
A company devoted to one line of business, or a company whose stock price is highly correlated with the fortunes of a specific investing theme or strategy.

Pure Yield Pickup Swap
A transaction in which bonds with lower yields are swapped for bonds with higher yields.

Put
1. An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time.

2. The act of exercising a put option.

Put Bond
A bond that allows the holder to force the issuer to repurchase the security at specified dates before maturity. The repurchase price is set at the time of issue, and is usually par value.

Put Option
1. An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time.

2. The act of exercising a put option.


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Put Ratio Backspread
An investment strategy that combines options to create a spread which has limited loss potential and a mixed profit potential.

Put Warrant
A warrant that gives the holder the right to sell the underlying share for an agreed price, on or before a specified date.

Put-Call Parity
The relationship between the price of a put and the price of a call on the same underlying with the same expiration date.

Put-Call Ratio
A ratio of the trading volume of put options to call options. It is used to gauge investor sentiment.

Puttable Common Stock
Common stock that gives investors the option to put the stock back to the company at a predetermined price.

PYG
In currencies, this is the abbreviation for the Paraguay Guarani.

Pyramid Scheme
An illegal investment scheme in which investors are promised substantial returns on their investments. Early investors at the top of the pyramid are paid with money from later investors.

Pyramiding
A method of increasing a position size by using paper profits from successful trades to increase margin.

Pyrrhic Victory
A victory or success that comes at the expense of great losses or costs. In business, examples of such a victory could be succeeding at a hostile takeover bid or winning a lengthy and expensive lawsuit.





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