eFinancialCareers

P
Fifth letter of Nasdaq stock symbol specifying issue is the company's first class of preferred shares.

P & I
Stands for principal and interest on bonds or mortgage-backed securities.

P&L
Profit and loss statement for a trader.

P&S
Purchase and sale statement. A statement provided by the broker showing change in the customer's net ledger balance after the offset of any previously established positions.

P-coast
Refers to west coast listed equity securities. See: Pacific Stock Exchange.

P/B
See: Price to book ratio

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.

P/S
See: Price to sales

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

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.

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.

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.

Package mortgage
A mortgage on a house and property in the house.

PAD
See: Preauthorized electronic debits

Paid in surplus
See: Paid-in capital

Paid up
When all payments that are due have been made.

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-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 of currency
The official exchange rate between two countries' currencies.

Par value
Also called the maturity value or face value; the amount that an issuer agrees to pay at the maturity date.

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.

Pari passu
Refers to the equal ranking of securities.

Paris Interbank Offer Rate (PIBOR)
The deposit rate on interbank transactions in the Eurocurrency market quoted in Paris.

Paris Bourse
National stock market of France.

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, U.S.$ 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.

Partial Vote
When only a portion of the total shares in an account is voted. For example, a broker has 1,000 shares and sends out a card to each of four shareholder clients. If only three of the four client cards are returned to the broker, the broker will submit only 3/4ths(750 shares) of the total 1,000 shares to vote. If the fourth card arrives later, an additional vote can be counted.

Participant
A party of a funding. It usually refers to the lowest rank or smallest level of funding.

Participant risk
The risk associated with the credit of the participants and possibility of non-performance.

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 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 preferred stock
Preferred stock that provides the holder with a specified dividend plus the right to additional earnings under specified conditions.

Participation
The amount of loan or bond issue taken directly from another direct lender or underwriter.

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-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.

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 date
The date when dividends or capital gains are paid to shareholders or reinvested in additional shares.

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.

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.

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
The amount required to repay a loan, including interest and fees.

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.

Payments System
Collective term for mechanisms (both paper-backed and electronic) for moving funds, payments and money among financial institutions throughout the nation. The Federal Reserve plays a major role in the nation's payments system through distribution of currency and coin, processing of checks, electronic transfer of funds and the operation of automated clearinghouses that transfer funds electronically among depository intitutions; various private organizations also perform payments system functions.

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 dividends. Morespecifically, the firm's cash dividend divided by the firm's earnings in the same reporting period.

PBGC
See: Pension Benefit Guaranty Corporation

PC
See: Participation certificates

PE
The two-character ISO 3166 country code for PERU.

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.

PEFCO
See: Private Export Funding Corporation

PEG Ratio
See: Prospective earnings growth ratio

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.

PEN
The ISO 4217 currency code for the Peruvian Nuevo Sol.

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. In the context of corporate governance, these provisions prevent an acquirer from using surplus cash in the pension fund of the target in order to finance an acquisition. Surplus funds are required to remain the property of the pension fund and to be used for plan participants' benefits.

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 annum
Yearly.

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.

PERC
See: Preferred equity redemption stock

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 cost less, 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 Accelerated Restricted Stock Award Plans ("PARSAPs")
Also known as performance-accelerated restricted stock ("PARS") and time-accelerated restricted stock award plans ("TARSAPs"). Grants of restricted stock or restricted stock units which may vest early upon attainment of specified performance objectives. Otherwise, a time-vesting schedule would remain in effect.

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. Usually part of a construction contract or supply agreement.

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 paid out to managers only if the company makes certain sales, earnings per share, or other similar criteria.

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 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.

Period-certain annuity
An annuity that provides guaranteed payments to an annuitant for a specified period of time.

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.

PERLS
Principal Exchange-Rated-Linked Securities.

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