The p-value is used in hypothesis testing to determine whether to accept or reject the null hypothesis. It is the smallest level of significance where the null hypothesis can be rejected. The p-val...

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A Pac Man Defense is a strategy for averting hostile takeovers. In instances where a company is the subject of a hostile takeover, it can employ a Pac Man Defense by making an offer to purchase the fi...

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The Pacific Exchange (PCX) was a stock exchange based in San Francisco and Los Angeles. Founded in 1882, the PCX used to be a trading floor in San Francisco. In 1957, it merged with the Los Angeles O...

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A package deal combines several products, discounts, features or services as one transaction. Let's say John Doe is considering taking a cruise. He could purchase his airfare and cruise separatel...

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Paid-up means that all payment obligations under a contract are met. Let's say John Doe takes out a car loan to purchase a 1985 Camaro. The loan requires 60 monthly payments of $141. John misses ...

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Paid-up capital, also called "paid-in capital," is a measure of how much money investors have pumped into the company since inception in return for equity. The line item appears on the balance she...

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In the finance world, painting the tape means to trade securities in a manipulative way in order to influence the reported trading data for those securities. Let's say traders A and B want more p...

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A pairoff, also known as "pairing off," occurs when a brokerage firm buys and sells short and long positions that offset one another and then settles those trades in cash. Let's say Brokerage XY...

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A pairs trade occurs when an investor buys two stocks in the same industry. Let's say John Doe buys shares of Ford and General Motors. The stocks tend to follow the same patterns -- they tend to ...

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Panic buying refers to the purchase of a stock immediately after a sudden, substantial price increase.Investors watching the market may jump to buy a stock immediately after a major move in the stock&...

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Panic selling is the sudden and widespread selling of a security.Panic selling may occur after a sudden, sharp decline in the price of a security.  Panic selling does not involve an evaluation of...

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Paper loss refers to the amount that would be lost on a security if it were sold.Also called a book loss, a paper loss is the not-yet-realized amount lost on a security based on the spread between its...

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A paper millionaire is a person who has at least $1 million of unrealized gains. Let's say John Doe starts a business. He invests all of his $50,000 savings, and soon the business takes off. Four...

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Paper money is a medium of exchange for goods or services within an economy. It is printed on paper, rather than in coin form. Paper notes are the most generally accepted forms of paper money. In most...

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Paper profit refers to the amount you would gain on a security if it were sold.Also called book profit, paper profit is the not-yet-realized amount gained on a security based on the spread between its...

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Paper trading is simulating market trading (buying and selling). Investors can practice trading by simulating securities purchases and sales without actually executing transactions with money. &#...

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Par value is the face value of a bond. It is the principal amount that the lender (investor) is lending to the borrower (issuer). Let's assume Company XYZ issues $1,000,000 in bonds to the public. It...

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The paradox of thrift is an economic theory that states that the more people save, the less they spend and thus the less they stimulate the economy. Developed by economist John Maynard Keynes, the pa...

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A parallel shift in the yield curve occurs when the interest rates among bonds (or T-Bills) with different maturity dates change at the same rate. For example, if the yield on a five-year Tr...

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A parent company has control of the management and operations of a subsidiary company. It is also referred to as "holding company." A parent company has enough voting stock to influence of the board ...

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Pari-passu is a latin term that means "at an equal rate or pace." The term is often used in venture capital. Let's assume Company XYZ is looking for $10 million of capital. It contacts three venture ...

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The Paris Club is slang for 19 developed countries who meet in Paris to discuss issues with nations to which they have lent money. The Paris Club has several members, including the United States, Uni...

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The Paris Hilton Stock Index is a list of companies that benefit from the actions of and associations with Paris Hilton. The index contains the following stocks: News Corporation (NYSE: NWS), whic...

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In the tax world, a parsonage allowance is income earned by members of the clergy but excluded from gross income. Let's say John Doe is a pastor at the XYZ Church. He earns $25,000 a year. The ch...

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A partial redemption occurs when an investor withdraws some of a security's value.   Let's say John Doe owns $200,000 of Treasury securities. He decides he's having a mid-life cris...

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Participating preferred stock gives stock holders priority over common stock holders for payment of dividends and proceeds from liquidation of a company.The capital stock structure of a company is typ...

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Participation rate usually refers to the portion of the economy's working age population that is in the civilian labor market.The participation rate measures the number of people who are in the la...

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A partnership is a business structure in which the owners (partners) share with each other the profits and losses. A partnership is organized to provide for proportional ownership of a company among ...

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A pass-through entity is a special business structure that is used to reduce the effects of double taxation. Pass-through entities don't pay income taxes at the corporate level. Instead, corp...

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Pass-through income is sent from a pass-through entity to its owners. The income is not taxed at the corporate level -- it is only taxed at the individual owners' level.A pass-through entity is a ...

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Pass-through securities receive payments from an intermediary that collects payments from a pool of assets. Mortgage-backed securities (MBS) are some of the most common pass-through securities. To ge...

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A passbook savings account is the classic name for a traditional savings account. Though it may seem quaint now, tellers record the deposits, withdrawals, and interest earned for account holders in a ...

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Passive income is income generated from any business activity in which the earner does not participate. When people describe the dream of "getting rich quick" and "striking it big," they are usua...

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Passive investing is a strategy focused on achieving long-term appreciation of portfolio values with limited day-to-day management of the portfolio itself.A passive investor is one who limits on-going...

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A passive loss is a financial loss from rental property, limited partnership or other activities in which the investor is not materially involved.When an investor buys shares in a rental property...

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Passive management is an investment strategy whereby an investor or financial advisor makes long-term investments in certain securities and is not influenced by short-term market fluctuations. The man...

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A passive trust, also called a "dry trust" or a "naked trust", is a trust into which a person transfers assets in order to pass them on to heirs or beneficiaries. For example, let's say John Doe...

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Past due means overdue. Typically, a bill is past due if the borrower is 30 days past the payment deadline. For example, let's assume your credit card payment is due on December 15. You forget to...

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The past-due balance method is a system for calculating interest charges based on loan or credit balances not paid prior to a specified due date.The past-due balance method for computing interest on c...

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Pasternak's normalized net asset value (NNAV) allows investors to compare master limited partnership (MLP) funds with each other and with non-MLP closed-end funds. Pasternak's NNAV was create...

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A patent is a grant of property rights to an invention. In the United States, this is done through the U.S. Patent and Trademark Office. A patent prevents others from using, making or selling a speci...

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A patent troll is a person or company whose main business purpose is to sue other people or companies for patent infringement. For example, John Doe buys a patent for the design and manufacture of a ...

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Pay yourself first is a phrase referring to the idea that investors should routinely and automatically put money into savings before spending on anything else. For example, let's assume you bring...

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Payable on death (POD) is a bank account type or designation. It applies to accounts when the account owner designates a beneficiary or beneficiaries for the account. The assets from the account are t...

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A paycation is when an employee takes paid vacation from his or her employer and works at another job. Let's say John Doe has earned two weeks of paid vacation at Company XYZ. He takes two weeks ...

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Paycheck-to-paycheck means a lifestyle in which a person does not save money and would incur significant financial stress if he or she does not receive his or her next paycheck. For example, let'...

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A payday loan is an advance on one’s paycheck. Independent lenders and some large banks offer the service. John Doe’s checking account has $12 in it but he has to pay the guy who fixed his...

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The term "payee" refers to an individual or entity that will receive a payment. It can also be referred to as the beneficiary in situations that pertain to a benefactor. There are a numbe...

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Payment in kind refers to the use of a good or service as payment instead of cash. Payment in kind may be made for an exchange of goods or services for work performed. The value of the goods or servi...

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A payment in kind (PIK) bond is a bond that pays interest in additional bonds instead of cash.Instead of the returns on a bond being paid in cash, the dividend is returned to the bond buyer in the for...

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The payout ratio, also known as the dividend payout ratio, is the percentage of a company's earnings paid out to investors as cash dividends. At the end of a specified period, companies wil...

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Payroll is the total of the compensation a company pays to its employees. In the accounting world, it is also a term used for calculating and processing paychecks (as in, "doing payroll"). On...

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A pegged exchange rate, also known as a fixed exchange rate, is a type of exchange rate in which a currency's value is fixed against either the value of another country's currency or another...

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Penny stocks are small-cap equity shares that trade in the over-the-counter market for prices between several cents and ten dollars.Penny stocks are usually issued by small or micro-cap companies to r...

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A pension plan is an arrangement to provide employees with an income when they are no longer earning a regular income from employment. A pension plan is usually a type of retirement plan that gives e...

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Per capita measures help analysts and investors get a better feel for whether a company, country, or other entity is productive, efficient, or profitable. For instance, the per capita measure of GDP i...

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Per share basis is a carefully scrutinized metric that is often used as a barometer to gauge a company's profitability per unit of shareholder ownership. In many cases, cash flow per share is one ...

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In finance, a perfect hedge is an investing strategy intended to protect an investment or portfolio against all losses. It usually involves securities that move in the opposite direction than the asse...

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Performance bonuses are intended to be motivational tools that encourage employees to keep goals in mind and take action in their everyday work to help the company achieve those goals. It is impo...

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Permanent life insurance is a life insurance plan that does not expire as long as the policy is in force. Permanent life insurance differs from term life insurance in that term life insurance cover...

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Permanent open market operations (POMO) are used by the Federal Reserve to either add to or drain the capital reserves available in the banking system. If the Federal Reserve wants to incre...

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A perpetual bond is a debt with no maturity date. Investors may collect interest from these bonds indefinitely much as they would expect from a dividend-paying stock or preferred stock. Such a bond is...

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Person-to-person payments (P2P) is an online technology that allows customers to transfer funds from their bank account or credit card to another individual's account via the Internet or a mobile ...

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Personal Consumption Expenditures (PCE), or the PCE price index, is a statistic compiled and released quarterly by the U.S. Bureau of Economic Analysis (BEA) that synthesizes a host of data, chief...

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A personal financial advisor (also spelled personal financial adviser) is an educated investment professional who helps people set and meet long-term financial goals. A personal financial a...

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Personal income, aka "before-tax income," is the total annual gross earnings of an individual from all income sources, such as: salaries and wages, investment interest and dividends, employer contribu...

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The Personal Income and Outlay report is compiled by the U.S. Department of Commerce. The report reflects personal income earned by individuals above the age of 18 working in the United States labor f...

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Personal property is a class of property that can be moved from one location to another.Generally, real property is a class of property that cannot be moved.  It includes land and buildings, for ...

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Petrocurrency, also commonly referred to as "petrodollars," is cash -- usually U.S. dollars -- resulting from the sale of oil and deposited by oil exporters into foreign (usually American) banks....

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Petty cash is money kept on-hand, generally, by businesses for making change for clients and to cover minor costs.Petty cash is commonly associated with storefront-type businesses who deal with client...

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The Philadelphia Gold and Silver Index (Nasdaq: XAU) is traded on the Philadelphia Stock Exchange and is made up of 16 precious metal mining companies. The Philadelphia Gold and Silver Inde...

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The Philadelphia Semiconductor Index, or SOX, is an index created by and traded on the Philadelphia Stock Exchange. It was introduced on December 1, 1993 with a split-adjusted value of 100. The S...

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The Phillips curve refers to the theory that unemployment rates relate inversely to inflation rates.Proposed by British economist A. W. Phillips, the Phillips curve graphically expresses an inverse co...

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Although physical assets commonly come to mind when one thinks of assets, not all assets are tangible. Trademarks, patents, and goodwill are examples of intangible assets. Regardless of their ph...

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A PIN-debit transaction, also known as an online transaction, is a password-protected payment method that authorizes a transfer of funds over an electronic funds transfer (EFT) When you pay for goods...

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Pink Sheets is a publication compiled daily by the National Quotation Bureau that shows over-the-counter (OTC) stocks' bid and ask prices and the dealers that exchange them. The companies lis...

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A pledged asset is collateral pledged by a borrower to a lender (usually in return for a loan). The lender has the right to seize the collateral if the borrower defaults on the obligation. In some cas...

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The opposite of the dividend payout ratio, a company's plowback ratio is calculated as follows: Plowback ratio = 1 – (Annual Dividend Per Share / Earnings Per Share) Let's assume Compa...

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A plutocracy is a system of government where the wealthiest people in a country rule or possess the power, and thus govern directly or indirectly. Plutocracy is often linked to the term “dynastic we...

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Private mortgage insurance (PMI), also called mortgage insurance, is what borrowers must pay on each mortgage payment if they didn't make a 20 percent down payment toward their home loan. The insu...

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A point-and-figure chart is a graph which records discrete price changes without accounting for an associated period of time. They are often used in technical analysis as a means of predicting future ...

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A poison pill is a strategy that tries to create a shield against a takeover bid by another company by triggering a new, prohibitive cost that must be paid after the takeover.There are many poison pil...

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Political risk is the risk of financial, market or personnel losses because of political decisions or disruptions. Also known as "geopolitical risk."There are many environmental factors facing busines...

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A Ponzi scheme is an investment scam that pays existing investors out of money invested by new investors, giving the appearance of earnings and profits where there are none. Ponzi schemes are also kno...

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Pork barrel spending is a type of appropriated expenditure that is added into a non-related Congressional bill.  Pork barrel spending may also be referred to as earmarking. The Oxford En...

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Pork Bellies are a major commodity traded on the Chicago Mercantile Exchange. Pork bellies are a commodity of pork products traded as a futures contract on the Chicago Mercantile Exchange since 1961....

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Porter's 5 Forces is an analytical framework for assessing business competitiveness strategies in a particular market.Michael E. Porter, a professor at Harvard Business School, developed a framewo...

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Portfolio hedging describes a variety of techniques used by investment managers, individual investors and corporations to reduce risk exposure in an investment portfolio. Hedging uses one investment t...

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Portfolio management refers to the professional management of securities and other assets. Also referred to as "asset management" and "wealth management."Portfolio management includes a range of profe...

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A portfolio manager is responsible for investing a fund's assets, overseeing investment strategy and carrying-out day-to-day trading.A portfolio manager manages mutual funds and other investment f...

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Position limit refers to the ceiling placed on the number of contracts on a single security which may be held by an individual or cooperative group.Determined by the Commodity Futures Trading Commissi...

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Positive correlation describes a relationship in which changes in one variable are associated with the same kind of changes in another variable. For example, many economists have discovered...

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Pre-market trading is the trading that occurs on electronic market exchanges before regular stock market trading hours begin. In the U.S., pre-market trading occurs between 8:00 a.m. and 9:30 a.m. Ea...

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A pre-tax contribution is a payment made with money that has not been taxed.   Anybody can take a portion of their monthly pay and put it in a savings account. But that’s after-tax money, mea...

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Pre-tax operating income is a company's operating income before taxes. The formula for pre-tax operating income is: Pre-Tax Operating Income = Gross Revenue - Operating Expenses – Deprecia...

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A predictive indicator is a ratio, index, report or other measurement that signals a company or market's direction in advance. The business cycle has highs and lows. That's why predicting...

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Preemptive rights are a clause in an option, security or merger agreement that gives the investor the right to maintain his or her percentage ownership of a company by buying a proportionate number of...

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Preferred shares represent an ownership stake in a company -- in other words, a claim on its assets and earnings. However, as the term suggests, "preferred" shares carry certain advantages. Wh...

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Like shares of common stock, shares of preferred stock represent an ownership stake in a company -- in other words, a claim on its assets and earnings. However, as the term suggests, "preferred...

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A premium put convertible bond is a bond that can be redeemed by the investor at premium before its maturity date.Premium put convertible bonds have a feature comparable to a put option that permits t...

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Premium to net asset value (NAV) refers to a situation where shares of a closed-end stock fund are trading at a price higher than the fund's net asset value per share. For example, a fund could be...

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Prepackaged bankruptcy refers to a plan for reorganization under Chapter 11 that a company drafts in cooperation with its lenders.If a company determines that Chapter 11 bankruptcy is inevitable, it m...

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Prepayment risk is the risk that a borrower will pay off a loan earlier than expected. For example, let's say that John Doe borrows $300,000 to buy a house in Phoenix. The loan is a 30-year mortgage ...

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Present value describes how much a future sum of money is worth today.  The formula for present value is: PV = CF/(1+r)n Where: CF = cash flow in future period r = the periodic...

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Preservation of capital is an investment strategy that focuses on preventing any losses of an investment's face value.A preservation of capital is a conservative investment philosophy that invests...

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Previous close shows what the price of a stock or market index was when the market closed on the previous trading day. Over the course of a day as securities are traded, a stock's price will rise...

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Price action is a term often used in technical analysis to interpret and describe price movements of securities. Technical trading revolves around chart and pattern analysis, and when patterns ch...

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A price band is a price floor and a cap between which a seller will let buyers place bids on a security, usually during an initial public offering (IPO) For example, let's say Company XYZ i...

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A price by volume (PBV) chart is a horizontal histogram that shows a cumulative total of how many shares of a stock traded at a given price.Mechanically speaking, a PBV chart is simply price, plotted ...

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A price cap regulation places a ceiling on the amount companies in a given industry (typically utilities and telecommunications providers) can charge for services.Price cap regulation typically has fo...

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A price ceiling is the maximum price a seller can legally charge a buyer for a good or service. Regulators usually set price ceilings. Price ceilings typically have four tenets: 1. The regulator (...

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In the stock market, a price change is the difference in trading prices from one period to the next or the difference between the daily opening and closing prices of a share of stock.For example, let&...

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In technical analysis, a price channel is an upper limit (called the resistance) and a lower limit (called the support) in which a security's price tends to stay.Price channels can slope up (indic...

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Price creep refers to a gradual increase in the price of a good or service.Price creep usually occurs because production costs have increased. Usually, producers will attempt to fight price creep by u...

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Price discovery refers to the act of determining the proper price of a security, commodity, or good or service by studying market supply and demand and other factors associated with transactions.In a ...

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Price discrimination is the act of charging different customers different prices for the same good or service.A common example of price discrimination is ladies' night: men must pay full price for...

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Price efficiency simply refers to whether the price of a security incorporates all the available information about the security.For example, assume that Company XYZ is a public company trading at $15 ...

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Price elasticity of demand (PED) is a way to measure the change in the demand for a product or service in response to a change in its price. With most goods, an increase in price will lead to a...

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Price fixing is an agreement among businesses to sell the same product or service at the same price.Price fixing involves the cooperation among two or more business competitors to set or stabilize a p...

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Price improvement is the often unexpected event of obtaining a better bid or ask price than the price quoted at the time the buy or sell order is made.For example, assume you own 1,000 shares of Compa...

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Price inflation is simply an increase in the price of a good or service over time.The consumer price index (CPI) is the most common measure of price inflation. The Bureau of Labor Statistics (BLS) cal...

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Price leadership is the act of setting the price for a good or service in an industry.Let's assume that Company XYZ manufactures windshield wipers. It is one of five windshield manufacturers in th...

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A price level adjusted mortgage (PLAM) is a mortgage with a fixed interest rate but an adjustable principal balance. For example, let's assume you take out a traditional 30-year, $100,000 mortgage at...

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In economics, a price maker is a monopolistic company that can dictate the prices of its goods because there are no substitutes for it. In trading, a price maker is a stockholder who controls a large ...

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A price multiple is a ratio that combines some measure of a company's performance and the company's stock price. In general, a price multiple ratio looks like this: Price multiple = Pric...

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Price per flowing barrel is a measure of an oil and gas company's valuation as compared to the number of barrels of oil or gas it produces.The formula used to calculate a company's price per f...

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Also called relative strength, price persistence is the tendency of a security's price to stay on trend relative to a market index such as the S&P 500. It is a measure of momentum.For example,...

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Price protection is an agreement between a buyer and a seller whereby the parties agree to fix the price of a good or service for a specific period of time.In practice, price protection (sometimes cal...

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A price ratchet is a trigger that changes the price of a security.For example, let's assume that the United States government defaults on interest payments on its Treasury securities. Because the ...

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The price rate of change is simply the percentage change in a security's price between two periods. The formula for the price rate of change is:Price Rate of Change = (Price at Time B - Price...

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Also known as collusion or price fixing, price rigging occurs when a group of people or businesses agree to set the price for something. In the stock market, traders with inside information might...

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Price risk is simply the risk that the price of a security will fall.Earnings volatility, unexpected financial performance, pricing changes, and bad management are common factors in price risk. For ex...

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In consumer behavior, price sensitivity (also called the elasticity of demand) is the degree to which price affects the sales of a product or service. Thus, the formula for price sensitivity is: ...

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Price stickiness refers to the price persistence of a good, service, security or economic measure (like wages) despite changing economic conditions.Prices can be sticky on the way up or sticky on the ...

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Price talk refers to discussions about the price of a pending initial public offering (IPO) or upcoming bond issue. Price talk is usually debate and discussion about what a fair price is for cert...

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A price target is an analyst's expectation for the future price of a security. For example, let's assume that the Jones-Smith investment bank provides research reports about Company XYZ s...

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Price tension refers to the presence of a large bid-ask spread.Let's assume you are watching Company XYZ stock. If the bid price is $50 and the ask price is $51.50, then the bid-ask spread (and th...

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Price transparency is the ability to know all of the bid prices, ask prices, and trading quantities for a given stock, good, or service at any point in time.For example, NYSE quotes have limited price...

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A price war is an event whereby two or more companies continually lower prices to undercut each other.Airline companies are famous for their price wars. If Airline XYZ cuts the price of a flight from ...

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A price-based option is a derivative based on the price of an underlying debt security, usually a bond.A price-based option gives the holder the right, but not the obligation, to purchase or sell (dep...

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The price-earnings relative is a comparison of a stock's P/E ratio to the cumulative P/E ratio of a related market index.The price-earnings relative considers the P/E of a given stock relative to ...

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Price-level targeting is an economic strategy whereby a central bank tries to reestablish an overall price level rather than reestablish a particular inflation rate.For example, let's assume that ...

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Price-takers, by definition, are not price makers. That is, they are not guaranteed profit makers, and they may even choose to make more product even if it’s not profitable to do so, just so they ca...

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The price-to-book ratio measures a company's market price in relation to its book value. The ratio denotes how much equity investors are paying for each dollar in net assets. Book value, usually lo...

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The price-to-cash flow ratio (P/CF) is used to evaluate the price of a company's stock as compared to the amount of cash flow it generates.The formula for the price-to-cash flow ratio is: Price...

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The price-to-earnings ratio (P/E) is a valuation method used to compare a company’s current share price to its per-share earnings. The market value per share is the current trading price for one...

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The price-to-free cash flow ratio (P/FCF) is a valuation method used to compare a company’s current share price to its per-share free cash flow.The formula for the price-to-free cash flow ratio ...

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The price-to-innovation-adjusted earnings ratio is used to evaluate the price of a company's stock as compared to its earnings when adjusted for the amount the company spends on R&D.The formul...

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The price-to-research ratio is used to evaluate the price of a company's stock as compared to its ability to generate future profits from new products.The formula for the price-to-research ratio i...

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The price-to-sales ratio helps determine a stock’s relative valuation. The formula to calculate the P/S ratio is:P/S Ratio = Price Per Share / Annual Net Sales Per ShareLet's assume Company ...

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The price-to-tangible book value ratio measures a company's market price in relation to its tangible book value. The ratio denotes how much investors are paying for each dollar of physical assets....

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A price-weighted index is an index in which the member companies are weighted in proportion to their price per share, rather than by number of shares outstanding, market capitalization or other f...

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The price/earnings-to-growth and dividend yield ratio (PEGY) demonstrates how much the market is willing to pay for earnings growth and dividend yield. By incorporating dividend yield, the PEGY ratio ...

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The PEG ratio is a derivative of the P/E ratio that takes into account future growth in earnings.  The formula for the PEG ratio is: PEG Ratio = Price-to-Earnings (P/E) Ratio / Annual Earning...

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"Priced out" refers to something being too expensive. Alternatively, priced out refers to the adjustment in a security's market price in response to new information.For example, a person e...

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Pricing power is the effect the price of a good or service has on the demand for that good or service.For example, a company that manufactures a pill that cures cancer has a lot of pricing power: the ...

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When financial assets and markets -- as with the broader economy -- fall steadily for an extended period of time, it is known as a primary downtrend, or "bear market." A primary downtrend i...

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When financial assets and markets -- as with the broader economy -- move in an upward direction for extended periods of time, it is known as a primary uptrend, or “bull market.”A primary u...

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The prime rate is the interest rate commercial banks charge their most creditworthy customers, which are usually corporations. Anyone who has borrowed money knows that different banks charg...

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In finance,  principal refers to the face amount of a debt instrument or an amount of money borrowed. For example, if you borrow $25,000 from XYZ Bank to purchase a car, the principal balance is...

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The sum total of a mortgage payment is comprised of principal, interest, taxes, and insurance (PITI). The amount of principal paid, interest paid, property taxes, and homeowners insurance is broken do...

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Principal-only STRIPS are synthetic zero-coupon bonds that are based on the principal component of Treasury securities. STRIPS stands for Separate Trading of Registered Interest and Principal of Secu...

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Out of 18 million businesses in the United States, fewer than 4,000 are publicly listed on a stock exchange. Private companies remain the default model of conducting business, so what are they and how...

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Private equity is money for investments made directly in private companies or in public companies that become private. Although some private equity comes from private individuals, most private equity...

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A private placement is an offering of securities that is not registered with the U.S. Securities and Exchange Commission (SEC)Companies issuing stock in the U.S. public capital markets must register t...

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A private-purpose bond is a municipal bond that uses a significant amount of its proceeds to fund private activities or benefit private parties. Let's assume Company XYZ wants to open a factory i...

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A privately held company is different from a public company in that its stock is not traded on public exchanges like the New York Stock Exchange, Nasdaq, American Stock Exchange, etc. Instead, shares ...

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A privately owned company is different from a publicly traded company in that its stock is not traded on public exchanges like the New York Stock Exchange, Nasdaq, American Stock Exchange, etc. Instea...

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Pro bono refers to any work or service that someone provides free of charge for the common good.From the Latin phrase "pro bono publico" meaning "for the public good," the motivation b...

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Pro rata refers to the proportional distribution of a sum across a number of units.A Latin term meaning "in proportion," pro rata is a method of allocating fractional amounts of something equa...

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Probate court is a section of the court system that transfers money and property from the deceased to heirs, beneficiaries or other entities. John Doe writes a will. In his will, he leaves his house t...

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Procurement is a purchasing process that controls quantity, quality, sourcing and timing to ensure the best possible total cost of ownership.Procurement may be a simple purchasing arrangement with a s...

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The Producer Price Index (PPI) is used to measure the change over time of the average price of goods produced domestically.The producer price index consists of a weighted index of goods prices at whol...

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Productivity refers to the measure of output (e.g. products) from a production process per unit of input (e.g. labor and capital).Productivity is usually expressed as a ratio of output to inputs. It c...

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Profit is the positive gain remaining for a business after all costs and expenses have been deducted from total sales. Profit is also referred to as the bottom line, net profit or net earnings. (See a...

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Profit and loss (P&L) statements are one of the three financial statements used to assess a company’s performance and financial position. The two others are the balance sheet and the cash flow s...

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Profit before tax measures a company's operating and non-operating profits before taxes are considered. It is the same as earnings before taxes.Simplifying things a bit, revenue minus expenses equals ...

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A profit center is a part of a company that directly adds to its profits.A company may have a variety of distinct departments, divisions, or operating groups, each with separate responsibilities and e...

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Profit margin usually refers to the percentage of revenue remaining after all costs, depreciation, interest, taxes, and other expenses have been deducted. The formula is: (Total Sales - Total Expen...

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A profit sharing plan gives employees a share in the company's profits. A profit sharing plan is usually structured to give a percentage of the profits to employees based on the company's...

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Profit taking is the act of selling stock to take advantage of a sharp rise in the stock price.Occasionally, investors will sell off their shares in a stock after the stock rises sharply.  It may...

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A profit warning is a public communication from a company that its earnings will fall below expectations.Profit warnings are part of the large, fluid world of earnings guidance, whereby the management...

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Program trading refers to automated trading by investors using computer programs. Program trading is used by institutional investors for large-volume trades through direct connections with the ma...

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A progressive tax is one in which the tax rate increases as the amount being taxed increases. Most western countries use a progressive tax in one way or another.Federal income tax in America is consid...

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Property insurance is an insurance policy or series of policies that provides insurance coverage for property protection and/or liability. The policy provides reimbursement to the policy owner in t...

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A property lien is a lender's claim against a piece of real estate that may be legally sold should the borrower fail to repay a loan. When someone takes out a sizeable loan, such as a home mortgage, ...

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Property tax is a tax on property -- usually real estate -- as determined by an assessor. Let's assume you own a house. The property tax assessor in your municipality will likely assign a value to th...

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A prospectus is a legal document that is required by the Securities Exchange Commission (SEC) to accompany securities or investment offerings for sale. A prospectus contains key facts and information ...

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An investor employs a protective put strategy when he purchases a put option of a stock of which he already owns shares.A protective put is usually used by an investor who has unrealized gains on a st...

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A protective stop is a stop-loss order put in place to guard against losses beyond a specific threshold.Investors often have an idea of how much of their investment they're willing to lose. A prot...

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A proxy statement is the common name for the Securities and Exchange Commission (SEC) Form 14-A. It is the document containing the voting ballot and material information related to the propositions to...

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A public company is a company that is permitted to sell its registered securities to the general public. Also referred to as a "publicly-traded company." A public company is a company with securities...

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A public limited company is a company which offers equity shares with limited liability to public investors on a registered exchange. More common in the U.K., public limited companies (PLC) offer sha...

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A public offering is a process of issuing new securities for sale to the public.   For example, let’s say the founders of Company XYZ want to sell half of their shares. They need buyers ...

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Public offering price (POP) refers to the price at which shares of a company are issued in an initial public offering (IPO) When a company issues stock for the first time as part of an...

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The public option refers to a portion of Obamacare that would have created a Medicare-like health insurance policy that most U.S. residents could purchase as an alternative to purchasing policies from...

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A public-purpose bond is a municipal bond that is used to fund projects that benefit the general public rather than private groups or individuals. Public-purpose bond contrast with private-purpose bon...

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A publicly traded partnership is a limited partnership that is traded in a capital market.Typically, a publicly traded partnership is a partnership between the limited partners who provide the capital...

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Pump and dump refers to an investment scam wherein optimistic, but untrue, statements are publicized about a specific stock in order to artificially increase the price through higher demand.In a pump ...

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Purchase protection is an agreement between a customer and a seller whereby the two sides agree to set the price of a good or service in place for a particular time period.In reality, purchase protect...

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Purchasing power is a phrase to describe the quantity of goods or services that a dollar can buy. A decrease in purchasing power is called inflation. Let's assume $1 bought 1.50 gallons of gas in...

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A pure yield pickup swap describes an investing strategy where an investor exchanges lower yield bonds for higher yield bonds.In a pure yield pickup swap, an investor who holds bonds with lower y...

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A put bond permits the bond holder to force the issuer to repurchase the security before maturity. In bond financing, the issuer sells bonds at a coupon rate (i.e., the interest rate payable on t...

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A put option is a financial contract between the buyer and seller of a securities option allowing the buyer to force the seller (or the writer of the option contract) to buy the security. In options ...

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Put-call parity refers to the relationship between put and call options for a given security, strike price and expiration date. Under put-call parity, the option prices should match, yielding no profi...

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The put/call ratio is a popular sentiment indicator based upon the trading volumes of put options compared to call options. The ratio attempts to gauge the prevailing level of bullishness or bear...

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Putable bonds are bonds that give the holder the right to sell his or her bond to the issuer prior to the bond's maturity date.The bond indenture will stipulate when and how the bond can be sold, ...

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Pyramiding refers to purchasing additional units of a security with unrealized profits on open trades.Investors engage in pyramiding in order to increase their portfolio position using the paper profi...

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