Paper Profit (Loss)
An unrealized gain (loss) on a security. Paper profits or losses are realized when the security is sold.

 

Par Value
Refers to the dollar amount assigned to a share of stock by a company's charter and which rarely reflects the market price. The par value of a preferred stock is the value upon which dividends are paid.

 

Passed Dividend
Refers to an omitted dividend on cumulative preferred stock.

 

Payout Ratio
The percentage of earnings paid out as a dividend.

 

P/E Ratio
See Price-Earnings Ratio

 

Point
Relating to a stock, a point means $1. Relating to a bond, a point means 1%. Relating to invest rates, a  point means 1/100 of a percent. See Basis Point.

 

Portfolio
An individual's or company's security holdings.

 

Portfolio Manager
A person who manages another's portfolio. Also a person who manages a mutual fund, pension fund, profit-sharing plan, or bank trust.

 

Preferred Stock
Stock that entitles the holder to a dividend at a specified rate that is paid before a common stock dividend is paid.

 

Premium
The price paid for a fixed-income security above its par value.

 

Price-Earnings Ratio
Probably the most used of all valuation ratios, the price-earnings ratio (also called P/E ratio or P/E multiple) permits an investor to analyze the price of a particular stock or compare the prices of different stocks. A lower P/E ratio indicates that a particular stock is trading at a less expensive market price than another stock with a higher P/E ratio based on the level of each firm's earnings.

 

 

Prime Rate
A preferential interest rate charged by a commercial bank only to its most credit-worthy customers.

 

Principal
The face value of a bond. Also refers to a person who owns 10% or more of a company's outstanding voting stock, an investor's capital base, or a trade involving a dealer.

 

Principal Amount
The face amount of a loan or face amount or par value of any debt security.

 

Profit and Loss Statement
Also referred to as a "P&L." A statement listing a company's income, expenses, and net profit or loss for a defined period.

 

Profit Taking
A term used to explain a drop in a stock price or in the general market absent of bad economic or financial news. The idea is that the reason investors are selling is to lock in profits.

 

Profitability Ratios
A series of ratios that measure the effectiveness of a firms profit generating abilities.

 

Prospectus
An official selling document that must be distributed to purchasers or potential purchasers of new securities that are registered with the SEC. In relation to a stock, this document is sometimes referred to as a "Red Herring."

 

Proxy Statement
A document which contains a variety of corporate information such as top management pay, a five-year performance graph that compares the stock against relevant indexes, and information concerning a company's board of directors. It also discloses the name and position size of any shareholders that own 5% or more of the company's stock. It is mailed at least annually to all shareholders of a particular firm so that they may vote on certain items relating to the company.

 

Public Offering
The original sale of a company's securities to the investing public.

 

Publicly Available Information
Information about a company that is readily available to the public.

 

Put
An option to sell a security at a stated price.