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Investment and Trading Glossary

A B C D E F G H I J K L M N O P  Q  R S T U V W X Y Z

 

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PARTNERSHIP

A form of business organization in which two or more individuals manage the business and are equally and personally liable for its debts.
PAR VALUE

The dollar amount assigned to a security by the issuer. For an equity security, par value is usually a small dollar amount that bears no relationship to the security´s market price. For a debt security, par value is the amount repaid to the investor when the bond matures, usually $1,000.

Syn. face value; principal; stated value.

See also capital surplus; discount bond; premium bond.

PASSIVE INCOME

Earnings derived from a rental property, limited partnership or other enterprise in which the individual is not actively involved. Passive income therefore does not include earnings from wages or active business participation, nor does it include income from dividends, interest and capital gains.

See also passive loss; unearned income.

PATTERN

A repetitive series of price movements on a chart used by a technical analyst to predict future movements of the market.
PENNANT See triangle.

PERSONAL INCOME (PI)

An individual´s  total earnings derived from wages, passive business enterprises and investments.
PLAN CUSTODIAN

An institution retained by a contractual plan company to perform clerical duties. The custodian´s responsibilities include safeguarding and issuing shares.

See also custodian; mutual fund custodian.

PLUS TICK RULE

The SEC regulation governing the market price at which a short sale may be made. No short sale may be executed at a price below the price of the last sale.

Syn. up tick rule.

PORTFOLIO INCOME

Earnings from interest, dividends and other nonbusiness investments.

See also earned income; passive income; unearned income.

PORTFOLIO MANAGER

The entity responsible for investing in a mutual fund´s assets,  implementing its investment strategy and managing day-to day portfolio trading.

Syn. fund manager

POSITION The amount of a security either owned (a long position) or owed (a short position) by an individual or by a dealer. Dealers take long positions in specific securities to maintain inventories and thereby facilitate trading.
POSITION TRADER

(1)    A dealer who acquires or sells an inventory in a security.

See also dealer; principal; make a market.

(2)    A commodities specular who buys or sells positions in the future markets as a means of speculating on long-term price movements.

See also day trader; scalper; spreader.

PREFERRED STOCK

An equity security that represents ownership in a corporation. It is issued with a stated dividend, which must be paid before dividends are paid to holders of common stock. It generally carries no voting rights.

See also callable preferred stock; convertible preferred stock; cumulative preferred stock; participating preferred stock, prior preferred stock.

PRELIMINARY PROSPECTUS

An abbreviated prospectus that is distributed while an issuer´s registration statement is being reviewed by the SEC. It contains the essential facts about the forthcoming offering except the underwriting spread, final public offering price and date on which the shares will be delivered.

Syn. red herring.

PREMIUM

(1)    The amount of cash that an option buyer pays to an option seller

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

PRESENT VALUE

The worth in today´s terms of a future payment or stream payments. It takes into account the time value of money by discounting the future value of an investment by an assumed compound interest rate.

PRICE-EARNINGS RATIO (PE Ratio)

A tool for comparing the prices of different common stocks by assessing how much the market is willing to pay for a share of each corporation´s earnings. It is calculated by dividing the current market price of a stock by the earnings per share.
PRIMARY EARNINGS PER SHARE See earnings per share.
PRIMARY OFFERING

An offering in which the proceeds of the underwriting go to the issuing corporation, agency or municipality. The issuer seeks to increase its capitalization either by selling shares of stock, representing ownership, or by selling bonds, representing loans to the issuer.

Syn. primary distribution.

PRIME RATE

The interest rate that commercial banks charge their prime or most creditworthy customers, generally large corporations.

PRINCIPAL

(1)    A person who trades for its own account in the primary or secondary market

(2)    See dealer.

(3)    See par value.

PRIVATE PLACEMENT

An offering of new issue securities that complies with Regulation D of the Securities Act of 1933. According to Regulation D, a security generally is not required the register with the SEC, it is offered to no more than 35 nonaccredited investors or to an unlimited number of accredited investors.

PROFITABILITY

The ability to generate a level of income and gain in excess of expenses.
PROPERTY DIVIDEND

A distribution made by a corporation to its stockholders of securities it owns in other corporations or of its products.

See also dividend.

PROSPECTUS

See final prospectus.

PUBLIC OFFERING

The sales of an issue of common stock, either by a corporation going public or by an offering of additional shares.

See also initial public offering

PUBLIC OFFERING PRICE (POP)

(1)    The price of new shares that is established in the issuing corporation´s prospectus.

(2)    The price to investors for mutual fund shares, equal to the net asset value plus the sales charge.

See also ask; bid; mutual fund; net asset value.