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- P
- P
- Fifth letter of Nasdaq
stock symbol specifying issue is the company's first class of preferred shares.
- P2P
- Business slang, usually used in reference to startups or internet startup,
refers to "path to profitability."
- PA
- The two-character ISO 3166 country Code for PANAMA.
- PAB
- The ISO 4217 currency code for the Panama Balboa.
- PAC
- See: Planned amortization
class
- PAC
- See: Preauthorized checks
- PAD
- See: Preauthorized
electronic debits
- PBGC
- See: Pension
Benefit Guaranty Corporation
- PC
- See: Participation certificates.
- PE
- The two-character ISO 3166 country code for PERU.
- PEFCO
- See: Private Export
Funding Corporation
- PEG Ratio
- See: Prospective
earnings growth ratio
- PEN
- The ISO 4217 currency code for the Peruvian Nuevo Sol.
- PERC
- See: Preferred equity
redemption stock
- PERLS
- Principal
Exchange-Rated-Linked Securities
- PF
- The two-character ISO 3166 country code for FRENCH POLYNESIA.
- PG
- The two-character ISO 3166 country code for PAPUA NEW GUINEA.
- PGK
- The ISO 4217 currency code for the Papua New Guinea Kina.
- PH
- The two-character ISO 3166 country code for PHILIPPINES.
- PHP
- The ISO 4217 currency code for the Philippines Peso.
- PHLX
- See: Philadelphia Stock
Exchange
- PIBOR
- See: Paris Interbank Offer
Rate
- PIK
- See: Payment-in-kind bond
- PK
- The two-character ISO 3166 country code for PAKISTAN.
- PKR
- The ISO 4217 currency code for the Pakistani Rupee.
- PL
- The two-character ISO 3166 country code for POLAND.
- PLC
- See: Project loan certificate
- PLN
- The ISO 4217 currency code for the Polish Zloty.
- PM
- The two-character ISO 3166 country code for SAINT PIERRE AND MIQUELON.
- PN
- The two-character ISO 3166 country code for PITCAIRN.
- PN
- See: Project notes
- PO
- See: Principal only
- PR
- The two-character ISO 3166 country code for PUERTO RICO.
- PS
- The two-character ISO 3166 country code for PALESTINIAN TERRITORY, OCCUPIED.
- PT
- The two-character ISO 3166 country code for PORTUGAL.
- PTE
- The ISO 4217 currency code for the Portugese Escudo.
- PVBP
- See: Price value of a
basis point
- PW
- The two-character ISO 3166 country code for PALAU.
- PY
- The two-character ISO 3166 country code for PARAGUAY.
- PYG
- The ISO 4217 currency code for the Paraguay Guarani.
- PAC Bond
- Stands for Planned Amortization Class bond. A tranche
class offered by some CMOs
that has a sinking fund schedule and an ability to make principal
payments that are not subordinated to other classes.
- Pacific
Stock Exchange
- 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.
- Pac-Man strategy
- Takeover defense strategy in which the
prospective acquiree retaliates against
the acquirer's tender
offer by launching its own tender offer
for the other firm.
- Package mortgage
- A mortgage on a house and property in
the house.
- Paid-in capital
- Capital received from investors in exchange for stock, but not stock from
capital generated from earnings or donated. This account includes capital
stock and contributions of stockholders credited to accounts other than capital
stock. It would also include surplus resulting from recapitalization.
- Paid in surplus
- See: Paid-in capital
- Paid up
- When all payments that are due have been made.
- Paid-up policy
- A life insurance policy
in which all premiums that are due have
been paid.
- Painting the
tape
- Illegal practice by traders who manipulate
the market by buying and selling a security
to create the illusion of high trading activity and to attract other traders
who may push up the price.
- Paired off
- Used for listed equity securities. Matched buy
and sell market orders, usually pertaining
to the pre-opening market picture
in a stock, or MOC
orders (especially relating to futures/options
expirations).
- Paired shares
- Stock of two companies under the same management
that are sold as one unit with one certificate.
- Pairoff
- A buyback to offset and effectively liquidate
a prior sale of securities.
- Panic
buying or selling
- Rapid trading of stocks
or bonds in high volume
in anticipation of sharply rising or falling prices, usually after unexpected
news is released.
- Paper
- Money market instruments,
commercial paper, and other.
- Paper dealer
- A brokerage firm that buys and sells commercial
paper to make a profit.
- Paper gain (loss)
- Unrealized capital gain (loss) on
securities held in a portfolio
based on a comparison of current market
price to original cost.
- Par
- Equal to the nominal or face value
of a security. A bond
selling at par is worth an amount equivalent to its original issue value or
its value upon redemption at maturity-typically $1000/bond. See: Discount,
premium.
- Par bond
- A bond trading
at its face value.
- Par value
- Also called the maturity value
or face value; the amount that an issuer
agrees to pay at the maturity date.
- Par value
of currency
- The official exchange rate between
two countries' currencies.
- Parallel bonds
- Fixed income instruments denominated in the respective currencies of the
countries where they are placed.
- Parallel loan
- A process whereby two companies in different countries borrow each other's
currency for a specific period of time,
and repay the other's currency at an agreed maturity
for the purpose of reducing foreign
exchange risk. Also referred to as back-to-back
loans.
- Parallel
shift in the yield curve
- A shift in economic conditions in which the change in the interest rate
on all maturities is the same number of
basis points. In other words, if the three
month T-bill increases 100 basis
points (one %), then the 6-month, 1-year, 5-year, 10-year, 20-year, and 30-year
rates all increase by 100 basis points as well. Related: Non-parallel
shift in the yield curve.
- Parameter
- A model is a combination of variables, such as GDP growth, and coefficients
which multiply these variables. The coefficients are often estimated from
the data. The coefficients are called parameters.
- Parent company
- A company that controls subsidiaries through its ownership of voting stock,
as well as runs its own business.
- Paris Bourse
- National stock market of France.
- Paris
Interbank Offer Rate (PIBOR)
- The deposit rate on interbank transactions in the Eurocurrency
market quoted in Paris.
- Parity
- For convertibles, level at which a convertible security's
market price equals the aggregate
value of the underlying
common stock; value/worth of the convertible
bond considered only as an equity instrument
(Conversion ratio times common
price). See: Conversion value.
For international parity, US$ price of a foreign stock's last sale in an overseas
market (Local currency stock
price times forex rate times ADR
ratio). For listed parity, condition whereby no party has floor priority,
and matching thus occurs. For options parity, dollar amount by which an option
is in the money. See: Intrinsic
value.
- Parity value
- Related: Conversion value
- Parking
- Putting money into safe investments
such as money market investments while
deciding where to invest the money.
- Parking violation
- Often used in risk arbitrage. Illegal holding of stock
by a third party, or the financing of such a stock, in which the third party's
sole reason for holding the stock is to conceal ownership or control of a
raider, thus sidestepping the Williams
Act requirements of 5% holding limits. See:
Rule 13d.
- Part B prospectus
- See: Statement
of Additional Information
- Partial
- Used in the context of general equities. 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 business
instead of losing the customers inquiry/order
to a competitor.
- Partial
compensation
- Incomplete payment for the delivery of goods to one party by buying back
a certain amount of product from the same party.
- "Participate
but do not initiate"
- Used for listed equity securities. "Participate in the side of the
market indicated by the order,
but do not initiate the interest that causes the trade
to take place." This kind of order can cause one to "miss stock"
because the broker of investor is at the mercy of the player who does initiate
the trade. See: Market
order go along, percentage order.
- Participating
buyer/seller
- Used for listed equity securities. (1) Customer willing to buy/sell
in line with market.
(2) Buyer/seller who goes along with another
buyer/seller in a percentage order.
- Participating
convertible preferred stock
- Preferred stock that can be converted
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 the holder. That is, one gets conversion plus
the value of the stock.
- Participating
dividend
- Dividend received from ownership of participating
preferred stock.
- Participating
fees
- The portion of total fees in a syndicated
credit that go to the participating banks.
- Participating
GIC
- A guaranteed investment
contract whose policyholder is not guaranteed a crediting
rate, but instead receives a return based
on the actual experience of the portfolio
managed by the life insurance company.
- Participating
life insurance policies
- Life insurance that pays
dividends to policyholders
depending on the company's success as provided by few claims and profitable
underwritings and investments.
- Participating
preferred stock
- Preferred stock that provides
the holder with a specified dividend plus
the right to additional earnings under
specified conditions.
- Participation
certificates (PC)
- Used in the context of general equities. Investments representing an interest
in a pool of funds or in other instruments,
such as foreign securities, that allow
participation in the rise or fall of a security
or group of securities.
- Participation
loan
- 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.
- Partner
- Business associate who shares equity in
a firm.
- Partnership
- Shared ownership among two or more individuals, some of whom may, but do
not necessarily, have limited liability
with respect to obligations of the group. See: General
partnership, limited partnership,
and master limited partnership.
- Partnership
agreement
- A written agreement among partners detailing the terms and conditions of
participation in a business ownership arrangement.
- Party in interest
- An ERISA-specified
individual—such as an administrator, officer, fiduciary, trustee, custodian,
or counsel—who is prohibited from making certain transactions involving
a retirement plan. A trustee, for example, would be prohibited from using
an IRA as collateral
for a loan.
- Pass the book
- The process of transferring responsibility for a brokerage firm's trading
account from one office to another around the world in order to benefit from
trading 24 hours a day.
- Pass-through
coupon rate
- The interest rate paid on a securitized
pool of assets, which is less than the rate
paid on the underlying loans
by an amount equal to the servicing and guaranteeing fees.
- Pass-through
rate
- The net interest rate passed through
to investors after deducting servicing,
management, and guarantee fees from the gross mortgage
coupon.
- Pass-through
securities
- A pool of fixed income securities backed
by a package of assets (i.e., mortgages) where
the holder receives the principal and
interest payments. Related: Mortgage
pass-through security
- Passive
- Income or loss from business activities in which a person does not materially
participate, such as a limited partnership.
- Passive
Activity Loss (PAL)
- A loss incurred in participating in passive investing.
- Passive bond
- A bond without any interest
yield.
- Passive income
- Income (such as investment income)
that does not come from active participation in a business. Specified by the
U.S. tax code.
- Passive
Income Generator (PIG)
- An investment that favors passive income,
such as an income-oriented real estate limited
partnership.
- Passive investing
- Putting money into a profitable business
opportunity that is deemed passive by the IRS
and thus benefits from tax deductions.
- Passive
investment management
- Buying a well diversified portfolio
to represent a broad-based market index
without attempting to search out mispriced securities.
- Passive
investment strategy
- See: Passive investment
management.
- Passive management
- See: Indexing
- Passive portfolio
- A market index
portfolio.
- Passive
portfolio strategy
- A strategy that involves minimal expectational input, and instead relies
on diversification to match the
performance of some market
index. A passive strategy assumes that the marketplace will reflect all
available information in the price paid for securities,
and therefore, does not attempt to find mispriced securities. Related: Active
portfolio strategy.
- Patent
- The exclusive right to use documented intellectual property in producing
or selling a particular product or using a process for a designated period
of time.
- Path-dependent
option
- An option whose value depends on the sequence
of prices of the underlying asset rather
than just the final price of the asset.
- Pattern
- A technical chart formation used to make market
predictions by following the price movements of securities.
- Pay-as-you-go
basis
- A method of paying income tax in which
the employer deducts a portion of an employee's monthly salary to remit to
the IRS.
- Pay-to-play
- Attempts by municipal bond underwriting
businesses to gain influence with political officials who decide which underwriters
are awarded the municipality's business.
- Pay-up
- The loss of cash resulting from a swap 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 context of general equities. (1) When an investor
who wants to buy a stock
at a particular price hesitates and the stock begins to rise; instead of letting
the stock go, he "pays up" to buy the shares
at the higher prevailing price. (2) Buy shares in a high-quality company at
what is felt to be a high, but supportable, price due to its quality.
- Payable
through drafts
- A method of making payment that is used to maintain control over payments
made on behalf of the firm by personnel in noncentral locations. The payer's
bank delivers the payable through draft to
the payer, which must approve it and return it to the bank before payment
can be received.
- Payable date
- The date when dividends or capital
gains are paid to shareholders
or reinvested in additional shares.
- Payables
- Related: Accounts payable
- Payback
- The length of time it takes to recover the initial cost of a project, without
regard to the time value of money.
- Pay-down
- In a Treasury refunding, the amount by
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 accumulation of
stock. Antithesis of pay-up.
- Payee
- A person receiving payment through any form of money transfer method.
- Payer
- The person making a payment to a payee.
- Paying agent
- An agent who makes principal
and interest payments to bondholders
on behalf of the issuer.
- Payment date
- The date on which shareholders of
record will be sent a check for the declared dividend.
- Payment float
- Company-written checks that have not yet cleared.
- Payment-in-kind
(PIK) bond
- 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.
- Payments netting
- Reducing fund transfers between affiliates to only a netted amount. Netting
can occur on a bilateral basis (between pairs of affiliates), or on a multi-lateral
basis (taking all affiliates together).
- Payments pattern
- Describes the collection pattern of receivables.
The pattern might describe the probability that a 72-day-old account will
still be unpaid when it is 73 days-old.
- Payoff diagram
- In option pricing, a graph of the value
of the option position at expiration
as a function of the underlying asset
price.
- Payoff profile
- The slope of a line graphed according to the value of an underlying
asset on the x-axis and the value of a position
taken to hedge against risk
exposure on the y-axis. Also used with changes in value. See: Risk
profile.
- Payout period
- The time period during which withdrawals from a retirement account or annuity
are paid.
- Payout ratio
- Generally, the proportion of earnings
paid out to the common stockholders
as cash dividends. More specifically, the
firm's cash dividend divided by the firm's earnings in the same reporting
period.
- P-coast
- Refers to west coast listed equity securities. See: Pacific
Stock Exchange.
- P/E
- See: Price/earnings ratio
- P/E effect
- That portfolios with low P/E
stocks exhibit higher average risk-adjusted
returns than those with high P/E stocks. Related: Value
manager.
- P/E ratio
- Current stock price divided by trailing
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 this year; $25.50 = 10 times $2.55. XYZ stock
sells for ten times earnings.
- Peak
- The high point at the end of an economic expansion until the start of a
contraction.
- Pecking-order
view (of capital structure)
- The argument that external financing transactions
costs, especially those associated with the problem of adverse selection,
create a dynamic environment in which firms have a preference, or pecking-order
of preferred sources of financing, when all else is equal. Internally generated
funds are the most preferred, followed by new debt,
and debt-equity hybrids. Finally, new equity
is at the least preferred source.
- Pegged
exchange rate
- Exchange rate whose value is pegged
to another currency's value or to a unit of account.
- Pegging
- Making transactions in a security,
currency, or commodity in order to stabilize
or target its value through market intervention.
- Penalty clause
- A clause found in contract agreements
that provides for a penalty in the event of default.
- Penalty tax
- A federal tax that can be applied if a plan holder does not meet certain
requirements when making withdrawals from a tax-advantaged retirement plan
(for instance, if the plan holder has not reached age 59-1/2). This penalty
tax is owed in addition to any income taxes due.
- Pennant
- A chart pattern resembling a pointed flag,
with the point facing to the right, which shows a diminishing variance of
price.
- Penny stock
- Used in the context of general equities. 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, usually because of heavy promotion. All are traded
OTC, many of them in the local markets of
Denver, Vancouver, or Salt Lake City.
- Pension
Benefit Guaranty Corporation (PBGC)
- A federal agency that insures the vested
benefits of pension plan participants
(established in 1974 by the ERISA legislation).
- Pension fund
- A fund set up to pay the pension benefits of a company's workers after retirement.
- Pension
liabilities
- Future liabilities resulting from pension
commitments made by a corporation. Accounting for pension liabilities varies
widely by country.
- Pension parachute
- A form of poison pill providing that
in the event of a hostile takeover
attempt, any excess pension plan assets
can be used to benefit pension plan
participants. This prevents the raiding firm from using the pension assets
to finance the takeover.
- Pension plan
- A fund that is established for the payment of retirement benefits.
- Pension reversion
- Termination of an overfunded defined benefit pension
plan and replacement of it with a life
insurance company-sponsored fixed annuity
plan.
- Pension sponsors
- Organizations that have established a pension
plan.
- Penultimate
profit prospect (PPP)
- The second-lowest-priced of the ten highest-yielding
stocks in the Dow
Jones Industrial Average that is said (by authors O'Higgins and Downes)
to be the Dow stock with the best possibility of outperforming the average
as a whole.
- People pill
- A form of poison pill providing that
the entire management threatens to resign in the event of a takeover.
- Per capita debt
- The total bonded debt
of a municipality divided by the population of the municipality.
- Per stirpes
- A method for distributing the assets
of an individual who dies without a valid will. The Latin means for each descendant.
- Percent to
double
- Percentage that the stock price has to rise (fall) to double the price of
the call (put).
- Percentage
financial statement
- Balance sheet and income
statement represented as percentages.
- Percentage
order
- Used for listed equity securities. Market
limited price order to buy/sell
a specified percentage (usually 50%) of shares
traded (sometimes after a fixed number of
shares of the stock have already traded).
See: participating buyer/seller,
"Participate but do not initiate."
- Percentage
premium
- Applies mainly to convertible securities. Premium
over parity of a convertible
bond divided by parity.
- Perfect
capital market
- A market in which there are never any arbitrage
opportunities.
- Perfect
competition
- An idealized market environment in which
every market participant is too small to affect the market
price by acting on its own.
- Perfect
forecast line
- Graph of a slope that matches the forecast of an exchange
rate with the actual exchange rate.
- Perfect hedge
- A situation in which the profit and loss from the underlying
asset and the hedge position
are equal.
- Perfect
market assumptions
- Conditions under which the law of one price holds. The assumptions include
frictionless markets, rational investors, and equal access to market
prices and information.
- Perfect
market view (of capital structure)
- Analysis of a firm's capital structure
decision, which shows the irrelevance of capital structure in a perfect capital
market.
- Perfect
market view (of dividend policy)
- Analysis of a decision on dividend
policy, in a perfect capital market
environment, that shows the irrelevance of dividend policy.
- Perfected
first lien
- A first attachment on an asset that is duly recorded with the relevant government
body so that the lender will be able to act
on it should the borrower default.
- Perfectly
competitive financial markets
- Markets in which no trader
has the power to change the price of goods or services. Perfect capital
markets are characterized by certain conditions: (1) Trading
is costless, and access to the financial markets is free; (2)information about
borrowing and lending opportunities is freely
available; and (3) there are many traders, and no single trader can have a
significant impact on market prices.
- Performance
attribution analysis
- The decomposition of a money manager's
performance results to explain the reasons why those results were achieved.
This analysis seeks to answer questions such as: (1) What were the major sources
of added value? (2) Was short-term factor timing statistically significant?
(3) Was market timing statistically significant?
and (4), was security selection statistically
significant?
- Performance
bond
- A surety bond between two parties, insuring
one party against loss if the terms of a contract
are not fulfilled.
- Performance
evaluation
- The assessment of a manager's results, which involves, first, determining
whether the money manager added value
by outperforming the established benchmark
(performance measurement) and, second, determining how the money manager achieved
the calculated return (performance attribution
analysis).
- Performance
fund
- A growth-oriented mutual fund investing
in growth stock and performance
stock with low dividends and high risk.
- Performance
index
- A risk-adjusted measure of how well a portfolio
has performed.
- Performance
measurement
- Calculation of the return a money
manager realizes over some time interval.
- Performance
shares
- Shares of stock
given to managers on the basis of performance as measured by earnings
per share and similar criteria. A control device shareholders
sometimes use to tie management to the self-interest of shareholders.
- Performance
stock
- High-growth stock in a company that
retains earnings for further growth and
therefore pays no dividends, but that an
investor feels has significant future potential.
- Period-certain
annuity
- An annuity that provides guaranteed payments
to an annuitant for a specified period of time.
- Period of
digestion
- 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.
- Periodic
call auction
- Selling stocks by bid at intervals throughout
the day.
- Periodic
payment plan
- Accumulation of capital in a mutual
fund by making regular payments on a monthly or quarterly basis.
- Periodic payments
- A series of payments from an annuity,
qualified retirement plan, or 403(b)(7) account made over a certain term of
years. A payment from an IRA,
even if over a period of years, is not considered a periodic payment for tax
purposes.
- Periodic
purchase deferred contract
- A fixed or variable annuity contract
for which fixed-amount premiums are paid
either monthly or quarterly, and that does not begin paying out until a time
elected by the annuitant.
- Periodic rate
- 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.
- Permanent Assets
- Fixed assets (plant and equipment)
and permanent current assets.
- Permanent
Current Assets
- The minimum level of current assets
that a firm needs to continue operation. Because some level is always maintained,
they are called permanent current assets.
- Permanent
financing
- Long-term financing using either debt or
equity.
- Permanent
spontaneous current Liabilities
- The minimum level of spontaneous liabilities
that is always maintained by a firm.
- Perpendicular
spread
- Option strategy involving the purchase
of options with similar expiration
dates and different exercise prices.
- Perpetual bond
- Nonredeemable bond with no maturity
date that pays regular interest rates
indefinitely.
- Perpetual
inventory
- Recordkeeping system in which book inventory is updated daily.
- Perpetual
warrants
- Warrants that have no expiration
date.
- Perpetuity
- A constant stream of identical cash flows
without end, such as a British consol.
- Perquisites
- Personal benefits, including direct benefits, such as the use of a firm
car or expense account for personal business, and indirect benefits, such
as up-to-date office decoration.
- Personal
article floater
- Insurance policy attachment designed to cover specified personal valuables.
- Personal
exemption
- Amount of money a taxpayer can exclude from personal income for each member
of the household in calculation of a tax obligation.
- Personal income
- Total income received from all sources, including wages, salaries, or rents,
and the like.
- Personal
inflation rate
- The inflation rate as it affects a specific
individual.
- Personal property
- Any assets other than real estate.
- Personal tax
view (of capital structure)
- The argument that the difference in personal tax rates between income from
debt and income from equity
eliminates the disadvantage of the double taxation (corporate and personal)
of income from equity.
- Personal trust
- An interest in an asset held by a trustee
for the benefit of another person.
- Petrodollars
- Deposits by countries that receive dollar revenues from the sale of petroleum
to other countries; the term commonly refers to OPEC
deposits of dollars in the Eurocurrency
market.
- Phantom income
- Income from a limited partnership
that creates taxability without generating cash
flow.
- Phantom stock
plan
- An incentive scheme that awards management bonuses based on increases in
the market price of the company's stock.
- Phase space
- A graph which shows all possible states of a system. In phase space we plot
the value of a variable against possible values of the other variables at
the same time. If a system had three descriptive variables, we plot the phase
space in three dimensions, with each variable taking one dimension.
- Philadelphia
Board of Trade (PBOT)
- A subsidiary of the Philadelphia Stock
Exchange that trades currency futures.
- Philadelphia
Stock Exchange (PHLX)
- A securities exchange
trading American and European foreign
currency options on spot exchange
rates.
- Philippine
Stock Exchange
- Stock exchange based in the Philippines,
which operates two trading floors, at Manila and Makati.
- Phillips Curve
- A graph that supposedly shows the relationship between inflation and unemployment.
It is conjectured that there is a simple trade-off between inflation and unemployment
(high inflation and low unemployment, and low inflation and high unemployment).
Named after A.W. Phillips. Obviously, the relation between these important
macroeconomic variables is more complicated than this simple graph would suggest.
For a modern treatment, see work of Robert Lucas.
- Phone switching
- Transferring money between funds in the same mutual fund family by telephone
request. There may be a charge associated with these transfers. Phone
switching is also possible among different fund families if the funds
are held in street name by a participating broker/dealer.
- Physical asset
- Actual property such as precious metals or real estate. Also called real
or tangible assets.
- Physical
commodity
- See: Commodity
- Physical
verification
- A procedure auditors use to ensure that inventory
recorded in the book is correct by actually
checking out the physical inventory.
- P & I
- Stands for principal and interest
on bonds or mortgage-backed
securities.
- Pickup
- The gain in yield that occurs when a block
of bonds is swapped for another block of higher-coupon
bonds.
- Pickup bond
- A bond with a relatively high coupon
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 bond at a premium.
- Picture
- Describes bid and asked
prices a broker
quotes for a given security. Used for listed
equity securities. Bid and ask prices and quantity information from a specialist
or from a dealer regarding a particular security
(i.e., "IBM's 1/4 to 1/2, 5m by 10m").
- Piece
- Apply mainly to convertible securities. Increment of bonds
that trade in portions of $1000 minimum. Not
all bonds can be traded in "pieces," and the increments can vary.
- Pie
model of capital structure
- A model of the debt-equity ratio
of the firms, graphically depicted in slices of a pie that represent the value
of the firm in the capital markets.
- Piggyback
registration
- When a securities underwriter allows existing holdings of shares in a corporation
to be sold in combination with an offering of new public shares.
- Piggybacking
- A broker who trading
stocks, bonds or commodities
in a personal account following a trade just made for a customer. The broker
assumes that the customer is making the trade on valuable inside information.
Illegal.
- PIK (Payment-in-kind) securities
- Highly speculative bonds or preferred
stock that pay interest or dividends
through additional bonds or preferred stock.
- Pink sheets
- Refers to over-the-counter trading. Daily
publication of the national quotation bureau that reports the bid
and ask prices
of thousands of OTC stocks, as well as the
market makers who trade
each stock.
- Pip
- Used for listed equity securities. Smallest unit of a currency
(i.e., cents for US dollars).
- Pipeline
- The underwriting process that must
be completed with the SEC before a security
can be offered for sale to the public.
- Pit
- A specific area of the trading floor that
is designed for the trading of commodities,
individual futures, or option
contracts.
- Pit committee
- A committee of the exchange that determines
the daily settlement price of futures
contracts.
- PITI
- Stands for principal, interest, taxes, and insurance, the four main parts
of monthly mortgage obligations.
- Pivot
- Price level established as being significant by market's
failure to penetrate or as being significant when a sudden increase in volume
accompanies the move through the price level.
- P&L
- Profit and loss statement for a trader.
- Place
- The marketing of new securities, usually
through sales to institutional
investors. See: Float.
- Placement
- A bank depositing Eurodollars with
(selling Eurodollars to) another bank is often said to be making a placement.
- Placement ratio
- The percentages of last week's new municipal
bond offerings that have been bought
from the underwriters, according to
the Bond Buyer newspaper.
- Plain vanilla
- A term that refers to a relatively simple derivative
financial instrument, usually a swap
or other derivative that is issued with standard
features.
- Plain vanilla
swap
- See: Fixed for floating swap
- Plan agreement
- A document detailing the terms and conditions of a retirement plan such
as an IRA.
- Plan participants
- Employees or other beneficiaries who are eligible to receive benefits from
a company's employee benefit plan.
- Plan
for reorganization
- A plan for reorganizing a firm during the Chapter 11 bankruptcy
process.
- Plan sponsors
- The entities that establish pension plans,
including private business entities acting for their employees; state and
local entities operating on behalf of their employees; unions acting on behalf
of their members; and individuals representing themselves.
- Planned
amortization class (PAC)
- (1) The class of CMO
that has the most stable cash flows
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Financial Glossary