Financial and Investment Glossary
Financial Dictionary
Par Value
The face value of a bond (typically $1,000) before fluctuations in the market cause it to be sold for more or less than its par value.
Partnership
A business enterprise comprised of two or more individuals. Liability is shared between partners. Income and expenses related to the partnership must be reported on each partners' individual personal income tax.
Payout Ratio
The percentage of net income paid out to shareholders in the form of dividends.
Payroll
The accounting records of employees' wages, salary, bonuses, taxes, and net pay.
PEG ratio
An indicator of whether a stock is undervalued or overvalued. To obtain the PEG ratio, a stock's price/earnings ratio (P/E) is divided by its forecasted earnings growth rate. A fairly valued stock would have a PEG ratio of 1.
Pension Plan
A retirement plan offered by some employers that pays a set amount each year during retirement.
Percent Held By Insiders
The percent of shares in a company's stock that is owned by the firm's directors, officers, and other key executives.
Percentage Held By Institutions
The percentage of a stock's traded shares that are held by institutions. It is determined by dividing the number of shares owned by institutions by the total number of shares outstanding.
Permit
A legal authorization to perform certain transactions or activities.
Points
The percentage of a loan amount that mortgage lenders charge as a fee. One point equals 1%.
Policy
A policy is a contract that sets forth the rights and obligations of both a policyholder and an insurance company.
Policyholder
A policyholder is a person who pays a premium to an insurance company in exchange for the protection detailed in an insurance policy.
Preferred Stock
A stock with a fixed dividend that is paid before common stock dividends. Generally, the preferred dividend is higher than the common stock dividend.
Premium
The fee you pay for insurance, usually a recurring expense paid at fixed intervals.
Present Value
The amount of cash in today's dollars that is equivalent in value to future payments, discounted at an appropriate compounded interest rate.
Previous Close
The price of a stock at the end of the previous trading day. By comparing the stock's closing price with the previous close, an investor can determine whether the stock gained or lost money at the end of the trading session.
Price-Volume Chart
Line charts that plot the price of a single stock or mutual fund and its trading volume over any time period.
Price/Cash Flow
An important ratio in determining the value of certain types of stocks. The ratio is determined by dividing the stock's price by the cash flow per share of the most recent fiscal year.
Prime Rate
The interest rate that banks use in pricing loans to their most creditworthy customers.
Principal
The amount of money put into an investment.
Principal Account
The liability or asset account associated with a loan. If you're borrowing money, the principal account is a liability account. If you're lending money, the principal account is an asset account.
Profit Margin
Determined by dividing net income by net sales during a time period and is expressed as a percentage. Net profit margin is a measure of efficiency and the higher the margin, the better.
Profit Sharing
An employer-sponsored tax-deferred retirement plan that allows employees to share in company profits. The employer makes contributions in profitable years to individual employee accounts. The account grows tax-deferred until the employee retires or leaves the company.
Proprietary Fund
Fund offered only in-house by a particular brokerage. When you transfer an account from one brokerage to another, any proprietary funds are sold and the resulting cash is transferred.
Prospectus
A document that must be filed with the Securities and Exchange Commission. when a company issues stocks or bonds to the public. In addition to telling how the deal is structured, the prospectus provides information on the company
Put
In options trading, the right to sell a specified number of shares of an investment instrument at a set price by a certain date.
The face value of a bond (typically $1,000) before fluctuations in the market cause it to be sold for more or less than its par value.
Partnership
A business enterprise comprised of two or more individuals. Liability is shared between partners. Income and expenses related to the partnership must be reported on each partners' individual personal income tax.
Payout Ratio
The percentage of net income paid out to shareholders in the form of dividends.
Payroll
The accounting records of employees' wages, salary, bonuses, taxes, and net pay.
PEG ratio
An indicator of whether a stock is undervalued or overvalued. To obtain the PEG ratio, a stock's price/earnings ratio (P/E) is divided by its forecasted earnings growth rate. A fairly valued stock would have a PEG ratio of 1.
Pension Plan
A retirement plan offered by some employers that pays a set amount each year during retirement.
Percent Held By Insiders
The percent of shares in a company's stock that is owned by the firm's directors, officers, and other key executives.
Percentage Held By Institutions
The percentage of a stock's traded shares that are held by institutions. It is determined by dividing the number of shares owned by institutions by the total number of shares outstanding.
Permit
A legal authorization to perform certain transactions or activities.
Points
The percentage of a loan amount that mortgage lenders charge as a fee. One point equals 1%.
Policy
A policy is a contract that sets forth the rights and obligations of both a policyholder and an insurance company.
Policyholder
A policyholder is a person who pays a premium to an insurance company in exchange for the protection detailed in an insurance policy.
Preferred Stock
A stock with a fixed dividend that is paid before common stock dividends. Generally, the preferred dividend is higher than the common stock dividend.
Premium
The fee you pay for insurance, usually a recurring expense paid at fixed intervals.
Present Value
The amount of cash in today's dollars that is equivalent in value to future payments, discounted at an appropriate compounded interest rate.
Previous Close
The price of a stock at the end of the previous trading day. By comparing the stock's closing price with the previous close, an investor can determine whether the stock gained or lost money at the end of the trading session.
Price-Volume Chart
Line charts that plot the price of a single stock or mutual fund and its trading volume over any time period.
Price/Cash Flow
An important ratio in determining the value of certain types of stocks. The ratio is determined by dividing the stock's price by the cash flow per share of the most recent fiscal year.
Prime Rate
The interest rate that banks use in pricing loans to their most creditworthy customers.
Principal
The amount of money put into an investment.
Principal Account
The liability or asset account associated with a loan. If you're borrowing money, the principal account is a liability account. If you're lending money, the principal account is an asset account.
Profit Margin
Determined by dividing net income by net sales during a time period and is expressed as a percentage. Net profit margin is a measure of efficiency and the higher the margin, the better.
Profit Sharing
An employer-sponsored tax-deferred retirement plan that allows employees to share in company profits. The employer makes contributions in profitable years to individual employee accounts. The account grows tax-deferred until the employee retires or leaves the company.
Proprietary Fund
Fund offered only in-house by a particular brokerage. When you transfer an account from one brokerage to another, any proprietary funds are sold and the resulting cash is transferred.
Prospectus
A document that must be filed with the Securities and Exchange Commission. when a company issues stocks or bonds to the public. In addition to telling how the deal is structured, the prospectus provides information on the company
Put
In options trading, the right to sell a specified number of shares of an investment instrument at a set price by a certain date.