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Glossary of Terms

pooled investments

funds which are collected from a number of individual investors, pooled together and managed by professionals. diversification and professional money management are the main benefits.

portfolio

investment holdings of an individual investor or organization usually composed of a mix of different asset classes of securities, such as shares, fixed income, property, and cash. an equities portfolio would include a mix of different sectors and stocks.

portfolio insurance

a strategy designed to protect a portfolio of stocks against market risk by selling index futures short or buying stock index put options for downside protection.

preference (preferred) shares

shares which provide a specific dividend that is paid before any dividends are paid to ordinary shareholders and which rank ahead of common shares in the event of a liquidation.

premium

describes any asset that is valued at more than the normal market price. the opposite of discount. also the price an investor pays the writer of an option.

price range

an index or share’s highest price and lowest price reached during any specific day, week or year.

price/earnings ratio (p/e ratio)

the market price of a company’s shares divided by its earnings per share to determine its attractiveness and how expensive in relation to other companies.

primary market

the market in which new securities are sold when first issued. the opposite of secondary market.

prime rate

the interest rate on bank loans set by commercial banks and charged to their most creditworthy borrowers.

private placement

the sale of securities directly to institutional investors and/or a limited number of investors (i.e. 19 investors or less) as opposed to a public offering.

private sector

the part of a nation’s economy owned and operated by corporations and individuals and not controlled by the government. the opposite of public sector.

productivity

the level of efficiency, measured by output per unit of input of labor, capital, and equipment, with which goods or services are produced.

program trading

computer-driven trades, entered directly from the traders computer to the market's computer system, based on signals from computer programs.

promissory note

a debt security issued and signed by a borrower, showing the amount which the borrower promises to repay to the note-holder on the loan’s maturity.

prospectus

a legal document offering securities for sale to the public and lodged and/or registered with the securities and exchange commission (sec). it must be made available to all interested investors in advance and contain financial and other information that could help individuals determine whether the investment is appropriate and/or suitable.

proxy

a written authorization given by a shareholder to someone else so that the second person can act in place of the first. the person authorized to act is known as the proxy and is most commonly used to vote shares at a shareholder's meeting.

public sector

the part of the economy concerned with providing basic government services such as health, education, transport and utilities. the opposite of private sector.

put call ratio

the ratio of put trading volume divided by the call trading volume over a specific period of time.

put option

a contract which gives the purchaser the right, but not the obligation, to sell a certain quantity of an underlying security to the writer of the option, at a specific price within specified period of time.

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