Financial Terms Dictionary - A-Z Glossary

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P&L attribution

P&L attribution describes the process of assigning profits and losses to specific trading activities or business areas, enabling businesses to understand what areas are contributing to a company’s financial performance.Learn more

Pakistani rupee

PKR is the international currency code for the Pakistani Rupee, the official currency of Pakistan, used for all monetary transactions within the country.

Paper valuation

Paper valuation refers to the estimated value of an asset based on current market conditions, but not necessarily realised through a transaction. It reflects how much the asset would be worth if sold under current market conditions.

Paris Bourse

The Paris Stock Exchange is a major European stock exchange located in Paris. It is known as Euronext Paris after its merger with exchanges in Amsterdam, Brussels, and later Lisbon.

Participating preferred stock

Participating preferred stock is a type of preferred shares that not only receive fixed dividends but also have the potential to earn additional dividends that are equivalent to the common stock dividends, based on certain conditions.

Passive Investing

Passive investment involves taking a long-term approach with minimal day-to-day trading. Typically, it relies on index funds or other investments that mirror market indices, aiming to replicate market returns rather than outperforming them.

Passive Order

A passive order in trading is an order placed in the market that is not immediately executed. These orders often provide liquidity and wait to be filled at the specified price, contrasting with aggressive orders that seek immediate execution.Learn more

Paydown

In finance, paydown refers to the partial or full repayment of the principal amount of a debt or loan before its due date. This can reduce future interest payments by decreasing the principal balance.Learn more

Payment for order flow

Payment for order flow refers to the compensation that a broker receives from a market maker for directing orders to them. This practice is controversial as it may create a conflict of interest by influencing the broker's choice of where to route client orders.

Payment schedule

A payment schedule details the dates and payment amounts to be made over time on a debt. Related products are mortgages, loans, and other forms of financing agreements.Learn more

Peer-to-Peer (P2P) Lending

Peer to peer, or P2P, is a finance term that refers to the direct exchange of assets, funds, or information between parties without the intermediation of a central authority. A surrounding concept is P2P lending, where individuals lend money to others directly through online platforms.

Penny Stocks

Penny stocks are low-priced shares of small companies not quoted on the main stock exchanges, and are usually considered highly speculative based on their low price and volatility.

Pension buyout

A pension buyout happens when an employer offers lump-sum payments or annuities to participants of a pension plan in exchange for forfeiting all or part of their pension benefits. This is often done to remove the pension liabilities from the company's financials.

Pension Fund

A pension fund is an investment pool typically set up by an employer to provide retirement benefits to employees. The funds are collected during the employees' working years and invested, and returns on the investments generate income to the workers upon retirement.

Perpetual option (XPO)

A perpetual option, also known as a non-expiring option, is a type of option with no expiration date, meaning the holder can exercise the option at any time while the contract is effectual.

Pfandbrief

A Pfandbrief is a type of covered bond that's issued by German banks marked by it being secured by long-term assets such as property mortgages or public sector loans. They are known for their safety as investment products.

PFTS index

The PFTS Index is the main benchmark index for the Ukrainian stock market, tracking the performance of major companies listed on the PFTS Ukraine Stock Exchange.

Philadelphia Gold and Silver Index

The Philadelphia Gold and Silver Index is a capitalisation-weighted index that includes leading companies involved in the mining of gold and silver. It is often used by investors as a benchmark for the performance of the precious metals industry.

PHLX Semiconductor Sector

The PHLX Semiconductor Sector Index is an index tracking the performance of companies primarily involved in the design, distribution, manufacture, and sale of semiconductors. It provides a broad representation of the semiconductor industry.

Pip

A pip in terms of forex trading, which is also known as point in percentage, is a unit of measure that expresses the smallest change in value between two currencies. It is typically equivalent to 0.0001 of a currency pair's quoted price.Learn more

Pledge fund

A pledge fund is a type of private equity investment model where investors commit capital to opportunities that are identified over time, allowing them to decide on a deal-by-deal basis whether to participate.

Policy Mix

The policy mix refers to the combination of fiscal and monetary policies that a government uses to influence its economy. Adjusting this mix involves changing spending levels, taxation rates, and interest rates to manage economic growth.Learn more

Political arbitrage

Political arbitrage involves taking advantage of price differentials in markets that may result from political events or decisions, such as elections, policy changes, or international relations.

Pool factor

In mortgage-backed securities (MBS), the pool factor is a number expressing the percentage of the original principal that remains to be paid off. It declines as the principal of the MBS is repaid over time.

Portfolio

A portfolio is a collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs.Learn more

Portfolio Diversification

Portfolio diversification is an investment strategy that spreads investments across various financial instruments, industries, and other categories to reduce risk.

Portfolio Entry

Portfolio entry refers to the act of adding a new investment to a portfolio. It involves assessing the potential impact of the new asset on the overall risk and return profile of the portfolio.

Portfolio Investment

Portfolio investment is an investment in securities by an individual or institution. It typically involves transactions in stocks, bonds, or other types of securities, rather than direct investment in physical assets.Learn more

Portfolio Management

Portfolio management involves overseeing a collection of investments, aligning strategies, and asset allocations with the investor's risk tolerance, time frame, and investment objectives.

Portfolio margin

Portfolio margin is a risk-based approach to determining margin requirements, allowing more leverage in a brokerage account by using a set of prescribed risk scenarios and stress tests.

Position

In trading, a position refers to the amount of a particular asset or security that is owned (or owed) by an individual or entity.Learn more

Position Trading

Position trading is a strategy where a trader holds a position in a security for a long period, from several weeks to years, aiming to profit from major price movements.

Post-earnings-announcement drift

This refers to the tendency of a stock’s cumulative abnormal returns to drift in the direction of an earnings surprise for some weeks (or even months) following an earnings announcement.Learn more

Potential future exposure

Potential future exposure (PFE) is a risk measurement that estimates the amount a portfolio could lose in the future due to changes in the market value of its positions.Learn more

Power brokers

In finance, power brokers are individuals or firms who are able to influence significant decisions and movements within financial markets or specific industries through their knowledge, influence, or position.

Prague interbank offered rate (PRIBOR)

PRIBOR, or the Prague Interbank Offered Rate, is the average interest rate at which term deposits are offered between prime banks in the Czech market.

PRBC

PRBC is an American consumer-credit reference agency. It allows individuals to enrol without charge and file their own data on payment of various bills to build up a positive credit file.

Pre-market

What is pre-market? It refers to the trading session that takes place before the main trading session begins on stock exchanges. It typically allows investors to trade stocks between 4:00am and 9:30am EST.

Pre-tax profit figure

Pre tax profit figure refers to the amount of money a company has earned before any tax is deducted. It provides insight into the operational effectiveness of the company without tax considerations.

Precautionary demand

Precautionary demand refers to the demand for financial assets or goods held as a safeguard against potential future crises or emergencies, influencing savings and liquidity preferences.Learn more

Precious metals

Precious metals, such as gold, silver, platinum, and palladium, are rare metals that have high economic value, often used as investment assets, in jewelry, and industrial applications due to their desirable properties. They can be traded via derivative instruments such as CFDs, or bought and sold physically.

Preference Shares

Preference shares are shares of a company's stock with dividends that are paid out to shareholders before common stock dividends are issued. They often do not carry voting rights.

Preferred dividends

Preferred dividends are payments made to holders of preferred shares, usually fixed and paid out before any dividends are paid to common shareholders.

Prepayment of loan

A prepayment loan is a loan where the borrower has the right to pay all or part of the principal before it is due. This can lead to reduced interest costs over the life of the loan.

Price action trading

Price action trading is a trading technique that makes use of historical prices to inform trading strategies, without the application of technical indicators, focusing instead on past price movements and patterns for insight into how the market might go.

Price Ceiling

A price ceiling is a restriction placed on how much a seller can charge for a product, commodity or service. They are used by governments to protect consumers from high costs and are especially implemented for essential items like fuel, rent, food and medicine.

Price Change

Price change is the difference in a financial asset's selling price at the close of the market compared to its price at the previous market close, reflecting volatility and market dynamics.Learn more

Price discovery

Price discovery is a term that describes the process whereby the current market price of any good, service or financial security is established. There is no price that is 'correct' for all time, so price discovery is a continuous process.

Price Level

The definition of a price level in economics refers to the average cost of all goods and services offered for sale. A price level can help determine where economic indicators like the gross domestic product (GDP) could trend.Learn more

Price limits

Price limits denote the maximum price range within which a security can rise or fall in the space of a trading session. They are set to prevent extreme volatility in markets.

Price sensitivity

The price sensitive meaning explains information that could dramatically influence the price of a company's shares, such as financial results, requiring careful handling and disclosure.

Price signal

A price signal is a change in the price of goods or services which indicates that the supply or demand should be adjusted. For example, if there is a shortage of oranges, the price will increase, signalling that the purchase and consumption of oranges must be reduced.Learn more

Price/cash flow ratio

The price cash flow ratio is a valuation metric that compares a company's market stock price to its per-share operating cash flow, offering insight into the stock’s value relative to the cash it generates.

Price/earnings (P/E ratio)

Earnings per share vs PE ratio is a key concept in finance. EPS represents the profit allocated to each outstanding share, while the PE ratio, or price-to-earnings ratio, relates a company’s share price to its earnings per share, helping to assess if a stock is over or under-valued.

Primary Market

The primary market is where new securities are issued and sold for the first time, allowing institutions such as corporations or governments to raise new capital.

Primary shares

Primary shares refer to the shares that are issued directly by a company to investors during an initial public offering (IPO) or other issuance, before they are available for trading on the secondary market.

Prime Standard

The Prime Standard is a market segment of the Frankfurt Stock Exchange that lists companies complying with international transparency standards, requiring more comprehensive disclosures than the General Standard.

Principal trade

A principal trade happens when a trading entity such as a brokerage buys or sells securities for its own account, rather than on behalf of a client, with the potential to profit from the trade margin.

Principled reasoning

Principle reasoning is based on using predetermined principles or consistent rules, as opposed to the specific details of a situation, with the goal to ensure fairness and integrity in the decision-making process.

Private electronic market

A private electronic market is an online platform that facilitates the trading of securities or other financial instruments among a select group of participants, away from public exchanges.

Private equity

Private equity refers to capital investment made into companies that are not listed. Investors typically aim to improve or expand the business before eventually seeking an exit, often through selling the company or taking it public.

Private Equity Fund

A private equity fund is an investment vehicle involving the contribution of various investors in private company investments which come under the guidance of a fund manager.

Private sector

The private sector is part of the economy that is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state. This is in contrast to the public sector, which offers public services largely funded by taxpayer income.

Procyclical and countercyclical

Procyclical and countercyclical factors move according to the condition of the economy. Procyclical factors increase when the economy is doing well and decrease during downturns. Countercyclical factors move in the opposite direction, that's to say they increase during economic downturns and decrease when the economy grows.Learn more

Producer Surplus

Producer surplus represents the difference between what producers are willing to sell a good for and the actual price they receive. It measures the benefit to producers from engaging in trade.Learn more

Productivity and Costs

Productivity cost refers to the economic impact of factors that affect the efficiency of production, including the cost of downtime or inadequate resource allocation.

Profit at risk

Profit at risk is a measure used to assess the potential decrease in expected profit due to changes in market conditions, often used to help companies manage and prepare for financial risks.

Profit risk

Profit risk is a way to describe the uncertainty associated with the ability to achieve forecasted profits, influenced by factors such as sales volume variability, cost fluctuations, and market dynamics.

Profit taking

Profit taking denotes the situation in which investors sell off shares or other securities to realise gains after the value of those securities has risen significantly, often leading to a temporary reversal or decrease in the market price.

Profit warning

A profit warning is an announcement by a company informing investors that its earnings will not meet previous expectations, often resulting in a decrease in its share price as market participants sell based on the negative results.

Profitability

Profitability measures the ability of a company to generate earnings as compared to its expenses and other relevant costs incurred during a specific period.

Profitability Index

The profitability index is a financial tool used to determine the relationship between the costs and benefits of a proposed project by dividing the present value of future expected cash flows by the initial investment.

Projected sales

Projected sales is a term that refers to the forecasted expected revenue for a company from its sale of goods or services over a future period, often used for budgeting and strategic planning.Learn more

Proof of Authority

Proof of authority, in relation to cryptocurrencies, is a system in blockchain networks where transactions and blocks are validated by approved and trustworty accounts, known as validators.

Proof-of-stake

Proof of stake is a cryptocurrency term that refers to a mechanism in blockchain technology that selects validators based on the number of coins they hold and are willing to 'stake' or lock up as collateral for the chance to validate transactions and earn rewards.

Proof-of-work (PoW)

Proof of work is a cryptocurrency term describing a situation where miners solve complex mathematical puzzles to validate transactions and create new blocks, requiring computational power and energy.

Proprietary Trading

Proprietary trading occurs when a firm or bank trades instruments such as shares, currencies, commodities with its own money, rather than on behalf of its clients, to make a profit for itself.

ProRealTime

ProRealTime is a technical analysis software designed for traders and investors, providing charting, advanced analytics tools, and automated trading capabilities integrated with various brokerage platforms.

Proxy statement

A proxy statement is a document containing the information the Securities and Exchange Commission requires companies to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual or special meeting.

Proxy Vote

A proxy vote describes how a designated person or proxy votes on behalf of a shareholder at a company’s annual general meeting or AGM, allowing decisions to be made without the shareholder's physical presence.

Prudential Regulation Authority (PRA)

The Prudential Regulation Authority is a UK financial regulatory body, part of the Bank of England, responsible for the regulation and supervision of banks, building societies, credit unions, insurers, and major investment firms. Its goal is to promote the safety and soundness of these financial institutions.

PSE All Shares Index

The PSE All Shares Index is a broad market index of the Philippine Stock Exchange, including all the companies listed on the exchange. It provides a comprehensive snapshot of the performance of the Philippine stock market.

PSE Financials Index

The PSE Financial Index is a sectoral index of the Philippine Stock Exchange that tracks the performance of financial sector companies, including banks, financial services firms, and insurance companies listed on the PSE.

PSE Index (PSEi)

The PSEI, or Philippine Stock Exchange Index (PSEi) is the main index that measures the performance of the top 30 companies listed on the Philippine Stock Exchange.Learn more

PSI 20 index

The PSI 20 Index is a benchmark stock market index of 20 major companies traded on the Euronext Lisbon in Portugal.

Public offering without listing

A Public Offering Without Listing, or POWL is when a company offers shares to the public without listing the shares on a stock exchange, often used in markets where full listing requirements might be too burdensome.

Public Sector

The public sector encompasses government-controlled organisations and entities that provide public programmes, goods, and services. It includes departments, services, and state-owned enterprises.

Pump And Dump

Pump and dump is a fraudulent scheme that attempts to boost the price of a stock through false, misleading, or greatly exaggerated statements. The perpetrators then sell their holdings at the inflated price before it crashes.

Purchase price adjustment

A Purchase price adjustment involves changes to the agreed purchase price of an asset based on variations in specified financial metrics before closing.Learn more

Purchasing Power

Purchasing power is the ability of currency to buy goods and services, with higher purchasing power indicating more buying capability.

Purchasing power parity

Purchasing power parity is a theory that states prices of goods and services should equalise between countries over time, adjusting for exchange rates.Learn more

Purple chip

Purple chip stocks are shares of companies known for consistent profitability and stability, regarded as safe investments.

Put Option

A put option is a financial contract giving the holder the right to sell an asset at a specified strike price within a predetermined time frame.Learn more