- Purchase and sale statement. A statement provided by the broker showing
change in the customer's net ledger balance after the offset of a previously
- Par value
- Also called the maturity value or face value, the amount that the issuer
agrees to pay at the maturity date.
- Parallel shift in the yield curve
- A shift in the yield curve in which the change in the
yield on all maturities is the same number of basis points. Related: Non-parallel shift in the yield
- Parity value
- Related: Conversion value
- Participating GIC
- A guaranteed investment contract where the policyholder is not
guaranteed a crediting rate, but instead receives a return based on the actual
experience of the portfolio managed by the life company.
- Related: Mortgage pass-through security
- 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.
- 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. Related: Active portfolio strategy
- 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 to give the bondholder a similar
bond. Related: Deferred interest bond, Step-up bond
- Pension Benefit Guaranty Corporation (PBGC)
- A federal agency that insures the
vested benefits of pension plan participants (established -in 1974 by the ERISA
- Pension plan
- A fund that is established for the payment of retirement benefits.
- Pension sponsors
- Organizations that have established a pension plan.
- Perfect hedge
- A hedge in which the profit and loss are equal.
- 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 the following questions: (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 evaluation
- The evaluation of a manager's performance 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 measurement
- The calculation of the return realized by a money
manager over some time interval.
- Perpetual warrants
- Warrants that have no expiration date.
- A specific area of the trading floor that is designed for the trading of an individual
futures or options contract.
- Pit committee
- A committee of the exchange that determines the daily settlement
price of futures contracts.
- 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
- Plowback rate
- Related: Retention rate.
- Related: Minimum price fluctuation.
- Policy asset allocation
- A long-term asset allocation method, in which the investor
seeks to assess an appropriate long-term "normal" asset mix that represents an ideal
blend of controlled risk and enhanced return.
- A collection of investments.
- Portfolio insurance
- A strategy using a leveraged portfolio in the underlying stock to
create a synthetic put option.
- Portfolio internal rate of return
- The rate of return computed by first determining the
cash flows for all the bonds in the portfolio and then finding the interest rate that will
make the present value of the cash flows equal to the market value of the portfolio.
- Portfolio management
- Investment management
- Portfolio manager
- Investment manager
- Portfolio turnover rate
- For an investment company, an annualized rate found by
dividing the lesser of purchases and sales by the average of portfolio assets.
- A market commitment; the number of contracts bought or sold for which no
offsetting transaction has been entered into. The buyer of a commodity is said to
have a long position and the seller of a commodity is said to have a short
position. Related: Open contracts
- Positive carry
- Related: Net financing cost
- Positive convexity
- A property of option-free bonds whereby the price appreciation for
a large change in interest rates will be greater (in absolute terms) than the price
depreciation for the same change in interest rates.
- Posttrade benchmarks
- Prices after the decision to trade.
- Preferred habitat theory
- A biased expectations theory which rejects the assertion
that the risk premium must rise uniformly with maturity. Instead, the extent that the
demand for and supply of funds i-,l a given maturity range do not match will induce
some participants to shift to maturities showing the opposite imbalances. However,
such investors will need to be compensated by an appropriate risk premium whose
magnitude will reflect the extent of aversion to either price or reinvestment risk.
- Preferred stock
- A class of stock that shares characteristics of both common stock
- The price of an options contract; also, in futures trading, the amount the
futures price exceeds the price of the spot commodity. Related: Inverted market
premium payback period Also called break-even time, the time it takes to recover the
premium per share of a convertible security.
- Prepayment speed
- Also called speed, the estimated rate at which mortgagers pay
off their loans ahead of schedule, critical in assessing the value of mortgage pass-
- Payments made in excess of scheduled mortgage principal
- Prerefunded bond
- Refunded bond.
- Pre-trade benchmarks
- Prices occurring before or at the decision to trade.
- Price compression
- The limitation of the price appreciation potential for a callable
bond in a declining interest rate environment, based on the expectation that the bond
will be redeemed at the call price.
- Price discovery process
- The process of determining the prices of the assets in the
marketplace through the interactions of buyers and sellers.
- Price-earnings (P/E) ratio
- The current market price of the stock divided by some
measure of earnings per share.
- Price impact costs
- Related: Market impact costs
- Price momentum
- Related: Relative strength
- rice persistence
- Related: Relative strength
- Price risk
- The risk that the value of a security (or a portfolio) will decline -in the
- Price value of a basis Point (PVBP)
- Also called the dollar value of an 01, a measure
of the change in the price of the bond if -the required yield changes by one basis
- Price-volume relationship
- A relationship espoused by some technical analysts that
signals continuing rises and falls in security prices based on accompanying changes in
- Pricing efficiency
- Also called external efficiency, a market characteristic where prices
at all times fully reflect all available information that is relevant to the valuation of
- Primary market
- The principal underlying market for a financial instrument or physical
- Private-label pass-throughs
- Related: Conventional passthroughs
- Probability distribution
- Also called a probability function, a function that describes all
the values that the random variable can take and the probability associated with each.
- Probability function
- Related: Probability distribution
- Profit margin
- The ratio of earnings available to stockholders to net sales.
- Program trades
- Also called basket trades, orders requiring the execution of trades in
a large number of different stocks at as near the same time as possible. Related: Block trade
- Projected benefit obligation (PBO)
- A measure of a pension plan's liability at the
calculation date assuming that the plan is ongoing and will not terminate in the
foreseeable future. Related: Accumulated benefit obligation
- Protective put buying strategy
- A strategy that involves buying a put option on the
underlying security that is held in a portfolio. Related: Hedge option strategies
- Provisional call feature
- A feature in a convertible issue that allows the issuer to call
the issue during the non-call period if the price of the stock reaches a certain price.
- Purchasing-power risk
- Related: Inflation risk
- Pure expectations theory
- A theory that asserts that the forward rates exclusively
represent the expected future rates. Related: Biased expectations theories
- Pure index fund
- A portfolio that is managed so as to perfectly replicate the
performance of the market portfolio.
- An option granting the right to sell the underlying futures contract. Opposite of a
call. Related: Call
- Put-call parity relationship
- The relationship between the price of a put and the price
of a call on the same underlying with the same expiration date, which prevents
- Put swaption
- A swaption in which the buyer has the right to enter into a swap as a
floating-rate payer. The writer of the swaption therefore becomes the floating-rate
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