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Painting The Tape
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An illegal action by a group of market manipulators buying and/or 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.
After...
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Paired Shares
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Stock of two companies under the same management that is sold as one unit and usually appears on one certificate.
These are also known as Siamese Shares or stapled shares.
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Paper Millionaire
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An individual who has achieved a High Net worth as a result of the large total Market value of the assets he or she owns.
This phenomenon usually occurs when investors buy marketable securities that are later Bid up to much higher prices on the Open market....
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Paper Profit (Paper Loss)
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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.
Investors commonly justify bad investment...
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Par Value
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Par value (also known as nominal value) is the face value of a Security.
The Par value of a Security - whether a stock or a Debt instrument - needs to be distinguished from both its issue price and its market price. Par value is a nominal value of a Security...
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Paris Club
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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...
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Parity
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Has different meanings in different markets:
1. For options, parity is the condition on which an Option's value in the market is the same as its Intrinsic value.
2. In the Warrant market, parity can be positive or negative.
3. In regards to convertible...
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Passive Management
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A style of management associated with mutual and Exchange-traded funds (ETF) where a fund's Portfolio mirrors a market index.
Passive management is the opposite of Active Management in which a fund's manager(s) attempt to beat the market with various investing...
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Payday Loan
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A transaction in which a Short-term Cash advance is made to a consumer in Exchange for a customer's post-dated check in the amount of the advance plus a fee, or in Exchange for a consumer's authorization to debit a transaction account in the amount of the...
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PC banking
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A service that allows a bank customer to obtain account information and perform certain bank transactions through a personal computer .
A personal computer banking system and method in which a personal computer is connected by a network service provider...
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PDA (Personal Digital Assistant)
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A small, handheld computer, capable of accepting input that the user writes on-screen with a stylus, that's designed to provide all the tools an individual would need for day to day organization, such as a Palm Pilot or Handspring Visor.
A personal digital...
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Penalty
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A fee imposed for a violation of a rule.
A clause in a mortgage contract that says if the mortgage is prepaid within a certain time period, a penalty Will be assessed. This is known as Prepaid penalty. The penalty is usually based on percentage of the...
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Penny Stock
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A stock that trades at a relatively Low price and market capitalization, usually outside of the major market exchanges.
These types of stocks are generally considered to be highly speculative and High Risk because of their lack of Liquidity, large Bid-ask...
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Performance Audit
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An Audit done on an asset manager by an outside accounting firm to verify that the performance figures shown to the public on marketing materials represent the true aggregate results of the firm's clientele.
The CFA Institute has established performance...
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Phantom Stock Plan
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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. It is an incentive plan that awards executives a...
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Phillips Curve
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A graph showing the relationship between the Inflation rate and the unemployment.
An economic concept developed by A. W. Phillips stating that Inflation and unemployment have a stable and inverse relationship. The theory states that with economic growth...
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Pigovian Tax
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A special Tax that is often levied on companies that pollute the environment or create excess social costs, called negative externalities, through business practices.
In a true market economy, a Pigovian Tax is the most efficient and effective way to correct...
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Pines
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Public Income Notes
An unsecured unsubordinated debenture issued by a public company. PINES trade on a stock Exchange, but also bear Interest. These types of securities are in that gray area between bonds and preferred stock.
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Pink Sheets
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A daily publication compiled by the National Quotation Bureau with Bid and ask prices of over-the-counter (OTC) stocks, including the market makers who trade them.
Unlike companies on a stock Exchange, companies quoted on the pink sheets system do not...
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PITI
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Stands for principal, Interest, taxes and insurance-the components of a monthly mortgage payment.
In relation to a mortgage, PITI (pronounced like the word "pity") is an acronym for a mortgage payment that is the sum of monthly principal, Interest, taxes,...
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Point of Sale. POS
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An electronic payment system for retail goods and services, through the use of credit cards or debit cards that directly access and deduct funds from a customer's checking account.
The point of sale often refers to the hardware and software used for checkouts...
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Poison Pill
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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 are:
1. A "flip-in" allows existing shareholders...
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Political Risk
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The Risk that an investment's returns could suffer as a result of political changes or instability in a country.
Instability affecting investment returns could arise from a change in government, legislative bodies, other foreign policy makers, or military...
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Portfolio
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A grouping of financial assets such as stocks, bonds and Cash equivalents, as well as their mutual, Exchange-traded and closed-fund counterparts.
Portfolios are held directly by investors and/or managed by financial professionals. Holding a portfolio is...
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Portfolio Management
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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 against performance.
Portfolio management is all about strengths, weaknesses,...
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Preferred return
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This is the minimum amount of return that is distributed to the limited partners until the time when the General partner is eligible to deduct carried Interest.
The preferred return ensures that the General partner shares in the profits of the partnership...
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Prepaid Expense
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A type of asset that arises on a Balance Sheet as a result of business making payments for goods and services to be received in the near Future.
While prepaid expenses are initially recorded as assets, their value is expensed over time as the benefit is...
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Present Situation Index
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A sub index that measures overall consumer sentiments toward the present economic situation and is used to derive (about 40% of) the Consumer Confidence Index, a widely used economic indicator.
The sub-index is compiled from data gathered from a Survey...
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Press Release
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News that is sent out or released by the company making the news.
If it's an Earnings press release, the release Will discuss the company's financial results for the recently completed quarter and may provide comments from management. Press releases often...
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Price Earnings Ratio (PE)
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The market price of a share divided by the company's Earnings(profits) per share in its latest 12 month trading period.
The P/E ratio of a stock (also called its "Earnings multiple", or simply "multiple", "P/E", or "PE") is a measure of the price paid...
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Private banking
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The providing of banking services to very wealthy individuals and families. Many financial services firms require a person or family to have a certain minimum Net worth to qualify for private banking services.
Private banking is a term for banking, investment...
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Pro Forma
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A projection or estimate of what may result in the Future from actions in the present.
A pro forma financial Statement shows how theactual operations of a business Will turn out if certain assumptions are realized. The term pro forma (occasionally written...
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Producer Price Index - PPI
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A group of indexes that measures the average change in selling prices received by domestic producers of goods and services over time.
Its measure price change from the perspective of the seller .A Producer Price Index (PPI) measures average changes in...
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Production Efficiency
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An economic level at which the economy can no longer produce additional amounts of a good without lowering the production level of another product. This Will happen when an economy is operating along its production possibility frontier.
It is the ability...
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Production Possibility Frontier - PPF
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A curve showing 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. Among others, factors such as labor, capital and technology Will affect where the...
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Profit and Loss Statement - P&L
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The portion of a company's financial statements that summarizes revenues and expenses during a specific period of time.
A financial Statement that summarizes the revenues, costs and expenses incurred during a specific period of time - usually a fiscal...
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Profit Center
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The branch or division of a company that creates profits individually and separately from the main organization.
The profit center's revenues and expenses are held separate from the main company's in order to determine their profitability. Profit Centers...
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PROFIT MARGIN
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Indicator of profitability that is calculated by dividing the Net Income by the revenue for the same twelve month period, and the profit Margin is represented as a percentage.
A ratio of profitability calculated as Net Income divided by revenues, or net...
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Program Trading
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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. In recent times, there has been a subset...
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Progressive Tax
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A Tax that takes a more percentage from the income of High-income people than it does from Low-income people.
Most income taxes are considered progressive. progressive Tax is a Tax that imposes a greater percentual burden on the rich than on the poor....
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Project Finance
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International Project Finance Association (IPFA)
We can define Project Finance as follows: The financing of Long-term infrastructure, industrial projects and public services based upon a non-recourse or limited recourse financial structure where project...
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Promissory note
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A signed Statement promising to pay to a specified person or the bearer a particular sum of money on a fixed date or on demand.
A promissory note, also referred to as a note payable in accounting, is a contract detailing the terms of a promise by one party...
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Proportional Tax
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An income Tax that takes the same percentage of income from everyone regardless of how much (or little) an individual earns.
The US and Canada do not use this system. It is quite controversial and certainly debatable whether or not this is a fair system....
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Proprietary Trading
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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.
Proprietary trading is a term used in investment banking to describe when the...
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Proration
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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.
When you Tender an Offer for a corporate action, the company...
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Prospectus
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A required legal document that offers securities or Mutual Fund shares for sale.
The Securities Act of 1933 requires that a prospectus explain the terms, issuer, objectives (if a Mutual Fund) or planned use of the money (if securities) and historical financial...
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Protectionism
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Actions taken by a government to prevent imports from destroying domestic producers.
Typical methods of protectionism are Import tariffs, quotas, subsidies or Tax cuts to Local businesses and direct state intervention.
Any time a government undertakes...
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Provisional Call Feature
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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.
For example, a convertible Bond may allow a provisional call if the Underlying Common Stock trades at 150% of the...
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Prudent Person Rule
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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.
Also called the Prudent Man Rule.
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Public Offering Price - POP
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The price at which new issues are offered to the public by an underwriter.
When underwriters determine the public offering price, they look at a number of factors. Some of these include the company's financial statements (how profitable it is), public...
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Puke
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Slang for selling off a losing Position even if the loss is substantial.
The point at which an investor decides to sell regardless of price has been dubbed "the puke point." This follows the theory that successful trading means always cutting your losses...
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Pump and Dump
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A highly illegal practice occurring mainly on the Internet.
A scheme that attempts to boost the price of a stock through recommendations based on false, misleading or greatly exaggerated statements. The perpetrators of this scheme, who already have an...
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Punter
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An investor who hopes to make quick profits.
Its another term for Speculator. A British and Australian term for one who gambles, a bettor.
A punter's approach is to speculate rather than invest. Thus, punters aren't concerned with the fundamentals...
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Purchasing Managers' Index (PMI)
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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.
A PMI of more than 50 represents expansion...
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Put Bond
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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. Bondholders have the Option of putting bonds back to the issuer...
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Pyramid debt
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The borrowing of funds in rapid succession without firs repaying previous Debt, usually to meet obligation on earlier loans.
Such a practice Will rapidly erode a borrower's financial Position.
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Pyramid Scheme
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An illegal investment Scam based on a hierarchical setup. New recruits make up the base of the pyramid and provide the funding, or so-called returns, given to the earlier investors/recruits above them.
A pyramid scheme is initiated by an individual or...
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