Glossary of Financial Terms: P
This article is from the Glossary of
Glossary of Financial Terms: P
- Payment date
Date on which a declared stock dividend or a bond interest payment
is scheduled to be made.
- Phone switching
In mutual funds, the ability to transfer shares between funds in
the same family by telephone request. There may be a charge
associated with these transfers. Phone switching is also possible
among different fund families if the funds are held in street name
by a particpating broker/dealer.
Price level established as being significant by market's failure
to penetrate or as being significant when a sudden increase in
volume accompanies the move through the price level.
- Point and figure chart
A price-only chart that takes into account only whole integer
changes in price, i.e., a 2-point change. Point and figure
charting disregards the element of time and is solely used to
record changes in price.
- Preferred stock
A security that shows ownership in a corporation and gives the
holder a claim, prior to the claim of common stockholders, on
earnings and also generally on assets in the event of
liquidation. Most preferred stock pays a fixed dividend, stated in
a dollar amount or as a percentage of par value. This stock does
not usually carry voting rights.
The price of an option contract, determined on the exchange, which
the buyer of the option pays to the option writer for the rights
to the option contract.
Price of a share of common stock on the date shown. Highs and lows
are based on the highest and lowest intraday trading price.
- Price/book ratio
Compares a stock's market value to the value of total assets less
total liabilities (book). Determined by dividing current price by
common stockholders' equity per share (book value), adjusted for
stock splits. Also called Market-to-Book.
- Price/earnings ratio
Shows the "multiple" of earnings at which a stock
sells. Determined by dividing current price by current earnings
per share (adjusted for stock splits). Earnings per share for the
P/E ratio is determined by dividing earnings for past 12 months by
the number of common shares outstanding. Higher "multiple" means
investors have higher expectations for future growth, and have bid
up the stock's price.
- P/E ratio equation
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 10 times earnings.
- Price/Sales Ratio
Determined by dividing stock's current price by revenue per share
(adjusted for stock splits). Revenue per share for the P/S ratio
is determined by dividing revenue for past 12 months by number of
- Primary market
The first buyer of a newly issued security buys that security in
the primary market. All subsequent trading of those securities is
done in the secondary market.
- Profit margin
Indicator of profitability. Determined by dividing net income by
revenue for the same 12-month period. Result is shown as a
- Program trading
Trades based on signals from computer programs, usually entered
directly from the trader's computer to the market's computer
system and executed automatically.
Formal written document to sell securities that describes the plan
for a proposed business enterprise, or the facts concerning an
existing one, that an investor needs to make an informed
decision. Prospectuses are used by Mutual Funds to describe the
fund objectives, risks and other essential information.
Document intended to provide shareholders with information
necessary to vote in an informed manner on matters to be brought
up at a stockholders' meeting. Includes information on closely
held shares. Shareholders can and often do give management their
proxy, representing the right and responsibility to vote their
shares as specified in the proxy statement.
- Put option
An option contract that gives the holder the right to sell (or
"put"), and places upon the writer the obligation to purchase, a
specified number of shares of the underlying stock at the given
strike price on or before the expiration date of the