Paid up Capital: The amount of capital, both equity and preference, paid up by the shareholders against the capital subscribed to by them.
Passive Investor: Investor who does not get closely involved with investee companies. Normally invests as a member of a syndicated deal or via a pooled fund.
Passive Management: A portfolio that aims to replicate a particular market index or benchmark fund and does not attempt to actively manage the portfolio
Paper Profits/Paper Loss: Unrealized profit/loss that exists only on paper because the investor has not finalized the transaction by actually selling the securities.
Panic Selling: A condition of the stock market in which not only inexperienced investors but also sturdy bulls take fright and start selling. It may be caused by sudden unfavorable news or rumor or a random walk by share downwards, or simply in bear conditions, the absence of financial institutions from the market.
Par Value: Means the face value of securities.
Pari Passu: A term used to describe the new issue of securities that have the same rights as similar issues already in existence.
Partial Tender Offer: A tender offer for less than all target shares; specifies a maximum number of shares to be accepted, but does not announce the bidder’s plans with respect to the remaining shares.
Participating Preference Shares: The right of certain preference shareholders to participate in profits after a specified fixed dividend contracted for is paid. Participation right is linked with the quantum of dividend paid on the equity shares over and above a particular specified level.
Partly Paid: Shares on which full nominal value has not been called up.
Pay In/Pay Out: The days on which the members of a Stock Exchange pay or receive the amounts due to them are called pay-in or payout days respectively.
Payment Netting: Settling payments due on the same date and in the same currency on a net basis.
P/E Ratio (Price Earnings Ratio): A commonly used indicator of the value of a stock, calculated as a company’s current share price divided by its earnings per share. A high P/E ratio may be justified because a company is expected to increase its earnings per share or it may indicate simply that the company is expensive.
Percentile: Relative ranking (in hundredths) of a particular portfolio (or manager) in a league table of returns. For example, a percentile ranking of 15 indicates that 14% of portfolios performed better and 85% produced a lower return.
Performance Attribution: Process which assigns over-or underperformance to the different steps taken in the investment management process, such as asset allocation, stock selection, currency management, etc. Used as a means to show where value has been added/lost.
Performance Measurement: Calculation of a fund’s historic return on its investments. This can be performed on total assets or on individual asset classes. For the purposes of analyzing a manager’s performance relative to a benchmark, performance is calculated on a time-weighted rate of return basis which is unaffected by the size and incidence of external cash flows (which are outside the manager’s control).
Performance-Related Fee: The investment management fee is determined by the degree of overperformance relative to an agreed benchmark.
Permitted Investments: Investments are detailed in an investment management agreement in which a manager may invest.
Perpetual Bond: Bond that is issued with no redemption or maturity date. The coupons on a perpetual bond are paid indefinitely.
Perpetuity: Stream of cash flows that theoretically will last forever.
Persons Acting in Concert (PAC): Individual(s) /company(ies)/ any other legal entity(ies) who are acting together for a common objective or for a purpose of substantial acquisition of shares or voting rights or gaining control over the target company pursuant to an agreement or understanding whether formal or informal.
Pension: Regular, periodic payment to an individual, usually following cessation of employment. This benefit will often be defined benefit or defined contribution in nature.
Penny Stocks (U.S.): Generic term for very low priced stocks- sometimes selling at a few pennies per share sometimes for a dollar or two- in speculative companies.
Pegging: Stabilizing the price of stocks, currency, commodities or gold through intervention by the government or government-controlled agencies which buy when the price falls below a certain level and sell when the price crosses a healthy level.
Perfect Competition: A theoretical market condition in which no buyer or seller has the power to influence the price. Perfect competition is said to prevail in a stock market in which the investors equally share all the information available and there are large numbers of them buying and selling.
Pig: Operators who get killed by the speculators.
Plain Vanilla Transactions: The most common and generally the simplest types of derivatives transactions. Plain vanilla is a relative concept, and no precise list of plain vanilla transactions exists. Transactions that have unusual or less common features are often called exotic or structured.
Players: A diverse range of intermediaries and institutional investors active in the capital market. This includes securities firms, broker-dealers, commercial banks, merchant banks, unit trust/mutual funds, etc.
Poison Pill (U.S.): A defense technique when a company issues to its shareholders a special preferred dividend stock that is convertible, after a takeover, into the acquirer’s shares. The successful bidder thus faces the prospect of heavy dilution.
Poison Put: A provision in some new bond issues designed to protect bondholders against takeover-related credit deterioration of the issuer. Following a triggering event, bondholders may put their bonds to the corporation at an exercise price of 100-101 percent of the bond’s face amount.
Point And Figure Chart: A graphic that records price activity without referring to time and volume. A point-and-figure chart is used to determine the trend of a security's price.
Pooling: The basic concept behind mutual funds is that a fund aggregates the assets of investors who share common financial goals. A fund uses the investment pool to buy a diversified portfolio of investments and each mutual fund share purchased represents ownership in all the fund's underlying securities.
Pools: A pool is essentially the same type of practice as a matched order, but involves more than one person colluding to generate artificial market activity.
Poop and Scoop: A highly illegal practice occurring mainly on the Internet A small group of informed people attempts to push down stock by spreading false information and rumors. If they are successful, they can purchase the stock at bargain prices.
Portfolio: A collection of securities owned by an individual or an institution (such as a mutual fund) that may include stocks, bonds, and money market securities.
Portfolio Investment: Investment that goes into the financial sector in the form of treasury bonds and notes, stocks, money market placements, and bank deposits. Portfolio investment involves neither control of operations nor ownership of physical assets.
Portfolio Manager: Any person who pursuant to a contract or agreement with a client, advises or directs, or undertakes on behalf of the client (whether as a discretionary portfolio manager or otherwise) the management or administration of a portfolio of securities or the funds of the client as the case may be.
Portfolio Turnover: A measure of the trading activity in a funds investment portfolio – how often securities are bought and sold by a fund.
Position Limit: The maximum number of listed option contracts on single security that can be held by an investor or group of investors acting jointly.
Position Netting: The netting of payment instructions in respect of obligations between two or more parties, but which neither satisfies nor discharges those original obligations.
Position Trading: Type of trading involving the holding of open positions for an extended period of time.
Ponzi Scheme: A classic con-trick that has been repeated many times both before and since Charles(Carlo) Ponzi gave it its name in the 1920s. The scheme begins with a crook setting up a deposit-taking institution. The crook invites the public to place deposits with the institution and offers them a generous rate of interest. The interest is then paid out of new depositors’ money, and the crook lives well off the old deposits. The whole scheme collapses when there are not enough new deposits coming in to cover the interest payment due on the old ones. By that time the modern-day Ponzi hopes to be living under an alias in a hot country with few extradition laws.
Preferred Stock / Preference Shares: Owners of this kind of stock are entitled to a fixed dividend to be paid regularly before the dividend can be paid on common stock. They also exercise claims to assets, in the event of liquidation, senior to holders of common stock but junior to bondholders. Holders of preferred stock normally do not have voice management.
Premium: 1. Price above the face value of a share or any other financial security. 2. Price paid for buying an option.
Price Gap: A term used in technical analysis when a share’s high and low during a day do not overlap the prices on the previous day. Such gaps tend to occur when the share is in n overbought or oversold position.
Preferential Allotment: Further issue of shares/securities convertible into equity shares at a later date, to a select group of persons in preference to all the existing shareholders of the company.
Present Value: Value in today’s terms of future cash flows discounted at some appropriate rate of interest.
Premium: If an investor buys a security for a price above its eventual value at maturity he has paid a premium for it.
Price Band: The range within which the price of a security or the index of a currency is permitted to move within a given period.
Price-to-Book Ratio: Comparison of a security’s market value with its book value, calculated by dividing the current closing price of a security by the latest published book value per share.
Price Discovery: A general term for the process by which financial markets attain an equilibrium price, especially in the primary market. Usually refers to the incorporation of information into the price
Price Earning Ratio: The ratio of the market price of the share to earnings per share. This measure is used by investment experts to compare the relative merits of a number of securities.
Price Rigging: When persons acting in concert with each other collude to artificially increase or decrease the prices of a security, the process is called price rigging.
Price Sensitive Information: Any information which relates directly or indirectly to a company and which if published is likely to materially affect the price of securities of the company.
Primary Trend: The predominant movement of a market (stock, bond, commodity, or other). When the primary trend is up, it is known as a bull market. When it is down, it is called a bear market.
Primary Market: A market for new issues of shares, debentures, and bonds, where investors apply directly to the issuer for allotment and pay application money to the issuer’s account.
Principal Guarantee: Feature of certain portfolio insurance products, usually achieved by investing part of the principal amount in a zero-coupon bond that will eventually return the amount invested over the agreed period of the investment.
Prime Rate: The interest rate on loans, which a bank is charging its best, most credit-worthy business customers. This interest rate affects all borrowers - not merely those who actually pay the prime rate because the level of the prime rate and the direction in which it is moving tends to determine other interest rates.
Private Equity: Shares in unquoted companies. Usually high risk, high return in nature
Profit Taking: Realizing profits by closing out an existing position.
Profit and Loss Statement: Summary of a company’s revenues and expenses over a specific period, which shows whether the company has made a profit or a loss. Also known as an income statement.
Prudence: Legal principle of “the prudent man” is a measure by which the decision-making of the individual or organization could be evaluated in comparison with what a reasonable person would have been expected to do.
Proprietary Fund (sub-account): A fund wherein the ownership of the funds is that of the Foreign Institutional Investor.
Prospectus: Any document described or issued as a prospectus and includes any notice, circular, advertisement, or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares in, or debentures of, a body corporate.
Protection Overlay: Portfolio management technique by which an investment manager aims to protect the capital value of a portfolio through risk management techniques such as dynamic hedging.
Proxy: One who votes for and on behalf of a shareholder at a company meeting.
Proxy Battle: A battle between a company and some of its own shareholders. It starts with a group of dissident shareholders soliciting proxies in order to force through a shareholder resolution.
Public Announcement: A public announcement is an announcement made in the newspapers by the acquirer primarily disclosing his intention to acquire shares of the target company from existing shareholders by means of an open offer.
Public Issue: An invitation by a company to the public to subscribe to the securities offered through a prospectus.
Public Securities: Trust Pooled unit trust which invests unit holders' money in government and semi-government securities.
Pullback: A situation in which a security or the overall market falls back from a previous advance.
Puffing Advertisement: Advertising or planting some news in the newspaper or in any media in respect of a proposed corporate action and later taking the stand that the Board of directors did not approve the proposed corporate action or news about financial results, given in misleading or distorted manner intended to generate or induce trading in the scrip.
Pump and Dump: A highly illegal practice occurring mainly on the internet. A small group of informed people buys a stock before they recommend it to thousands of investors. The result is a quick spike in the price followed by an equally quick downfall. The people who have bought the stock early sell-off when the price peaks.
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, prevents arbitrage opportunities. Put Option An option that gives the right to sell a fixed number of securities at a specified price (the strike price) within a specified period of time.
Put Option: An option that gives the right to sell a fixed number of securities at a specified price (the strike price) within a specified period of time.Stock Market Reference (A-Z)