sohomghosh/FinRAD_Financial_Readability_Assessment_Dataset

terms stringlengths 1 156	definitions stringlengths 3 4.2k	source stringclasses 15 values	flesch_reading_ease float64 -301.79 121	flesch_kincaid_grade float64 -3.5 55.6	smog_index float64 0 26.5	coleman_liau_index float64 -33.81 51.4	automated_readability_index float64 -6.9 65	dale_chall_readability_score float64 0.1 35.3	linsear_write_formula float64 -0.5 73	gunning_fog float64 0.4 56
PREPACK	See AGED BANKRUPTCY.	palgrave	59.97	5.6	0	7.32	8.3	9.05	1.5	14.53
PREPAYMENT	(1) The early repayment of a MORTGAGE by a BORROWER as a result of the sale of the underlying home/property or a REFINANCING to take advantage of a lower INTEREST RATE environment. (2) The payment of any sum of money for goods or services that have not yet been received. A prepayment is reflected as an ASSET on the BALANCE SHEET. (1) See alsoPREPAYMENT MODEL, PREPAYMENT SPEED.	palgrave	37.47	16.4	0	9.35	17.3	10.25	22.75	19.97
PREPAYMENT MODEL	An analytic process used to estimate the PREPAYMENT SPEED of MORTGAGES comprising a POOL or PASS-THROUGH SECURITY, which can then be used to value the ASSET. Common mod- els include the constant prepayment rate model, which assumes mortgagePRINCIPAL prepayments occur at a constant annual rate that can be estimated from historical mortgage data, and the Public Securities Association standard prepayment model, which assumes mortgage PREPAYMENTS occur at variable speeds (e.g., 0.2%/month for 30 months, then 6% annually).	palgrave	15.48	20.7	0	15.62	25.2	12.93	27.25	22.15
PREPETITION PHASE	A stage of FINANCIAL DISTRESS, such as the VICINITY OF INSOLVENCY, when a company is preparing to file a BANKRUPTCY petition. During this period the rights of CREDITORS often supersede those of SHAREHOLDERS, as DIRECTORS and executives attempt to preserve as much ENTERPRISE VALUE as possible in advance of a REORGANIZATION or LIQUIDATION.	palgrave	19.2	17.2	0	13.87	17.3	10.91	21.75	21.92
PRE-REFUNDING	A new BOND issue floated by a company in order to repay an existing bond issue at the FIRST CALL DATE; proceeds of the pre-refunding are generally invested in low-RISK SECURITIES until the original bond can be called and redeemed. Pre-refunding typically occurs in an environment where INTEREST RATES have declined enough to make the REFINANCING an eco- nomically beneficial process.	palgrave	23.6	17.5	0	13.36	18.8	11.62	22.25	20.07
PRESENT EXPECTED VALUE	An ACTUARIAL PRICING method of calculat- ing PREMIUM for INSURANCE coverage, generally via:PEV = Probocc (Facepol) (PVfactor)where Probocc is the PROBABILITY of loss occurrence, Facepol is the FACE VALUE of the POLICY, and PVfactor is a PRESENT VALUE factor.	palgrave	-0.94	22.8	0	15.21	24.8	13.42	31.5	25.73
PRESENT VALUE	A financial computation where future CASH FLOWS are discounted back to current terms through use of an appropriate DISCOUNT RATE or COST OF CAPITAL. The general form of the equation is given as:PV = CF (1 + r )twhere CF is the future cash flow, r is the discount rate, t is the future period.The present value of a cash flow that is subject to CONTINUOUS DISCOUNTING is given as:where e is the exponential constant, N is the number of years over which the compounding occurs.The computation for multiple periods is given as:t =1 (1 + r )twhere CFt is the expected cash flow at time t, n is the number of periods, and other terms are as defined above.The present value of a recurring cash flow, as in an ANNUITY, is given as:11 ⎤⎣ rSee also DISCOUNTED CASH FLOW, FUTURE VALUE, NET PRESENT VALUE.	palgrave	7.87	29.8	0	9.37	35.6	11.27	32.5	32.34
PRESENTING BANK	A BANK that seeks payment on a BILL OF EXCHANGE, DRAFT, or CHECK from the bank on which the order has been drawn.	palgrave	90.43	6.4	0	5.23	8.7	6.84	11.5	9.2
PRESETTLEMENT RISK	See FRACTIONAL EXPOSURE.	palgrave	9.21	12.7	0	15.03	14.6	14.31	2.5	27.87
PRESIDING DIRECTOR	See LEAD INDEPENDENT DIRECTOR.	palgrave	8.2	13.1	0	14.5	12.4	11.73	3	21.6
PRICE-BOOK RATIO	A measure that compares market and ACCOUNTING values to determine potential undervaluation or overvaluation of a company. Price-book is generally computed via:where S is the current STOCK price and BVPS is BOOK VALUE per share.A high ratio, or an increasing ratio over time, may indicate a growth stock, while a low ratio may suggest an opportunity to purchase the stock of a com- pany that has not realized its valuation potential.	palgrave	26.98	18.3	0	12.14	20.3	10.96	24.75	20.96
PRICE COMPRESSION	A phenomenon where the price of a CALLABLE BOND remains close to its call redemption price in a declining INTEREST RATE environment since the likelihood of a call, redemption, and REFINANCING increases.	palgrave	30.54	17	0	13.76	19.7	10.65	25	22.8
PRICE CONTROL	Caps or ceilings placed by a government authority on spe- cific goods or services, generally as an attempt to control INFLATION. Price controls run contrary to free market economic principles and are more charac- teristic of certain COMMAND ECONOMIES.	palgrave	43.22	12.1	0	13.63	14	12.3	13.25	13.95
PRICE DISCOVERY	The process of establishing a fair market price for an ASSET through the interaction of buyers and sellers via AUCTION or quotation,typically through an organized marketplace such as a physical or electronicEXCHANGE.	palgrave	22.08	18.1	0	16.49	21.8	12.13	23	22.8
PRICE/EARNINGS (P/E) RATIO	A measure of a company’s value and EARNINGS RISK, computed from the latest reported earnings in the general form of:where S is the STOCK price and EPS is EARNINGS PER SHARE.	palgrave	48.47	14.2	0	9.53	15.8	9.76	19.5	16.27
PRICE ELASTICITY	The ratio of a proportional change in quantity supplied or demanded for a proportional change in price; the greater the price elas- ticity, the more sensitive SUPPLY or DEMAND to changes in price. See alsoELASTICITY.	palgrave	27.49	18.1	0	12.66	20.6	11.24	24.5	20.86
PRICE KEEPING OPERATIONS	A technique used by the Japanese monet- ary authorities to “encourage” its FINANCIAL INSTITUTIONS to actively buy SECURITIES in order to provide price supports at key levels.	palgrave	18.69	17.4	0	14.39	17.9	12.58	20.5	21.17
PRICE LEVEL ACCOUNTING	See INFLATION ACCOUNTING.	palgrave	9.21	12.7	0	16.95	16.2	14.31	2.5	27.87
PRICE LIMIT	A boundary placed on certain EXCHANGE-traded ASSETS (e.g., FUTURES, OPTIONS, COMMON STOCKS) that limits the amount of upward or downward price movement that can occur during a TRADING session. A price limit is a form of CIRCUIT BREAKER that is intended to control excessive VOLATILITY and/or market overreaction.	palgrave	38.66	13.8	0	13.7	16.6	12.72	14.5	12.93
PRICE SPREAD	See BEAR SPREAD, BULL SPREAD.	palgrave	117.16	-1.9	0	4.96	4.6	0.25	1.5	2
PRICE SUPPORT	A floor placed by a government authority on the price of a particular good, often an agricultural COMMODITY, typically implemented through the purchase of a particular amount of the good or the payment of any price differential between the agreed floor and the open market price.	palgrave	16.33	22.4	0	12.72	25.5	9.35	32	24.49
PRICE TAKER	A small INVESTOR that has no ability to impact or influ- ence SECURITIES prices, and must simply accept the BID or OFFER in the marketplace.	palgrave	54.56	11.9	0	9.23	12.9	10.56	15.5	14.8
PRICE TALK	An estimate of the potential pricing on a NEW ISSUE of SECURITIES or a LOAN based on presoundings in the market by the LEAD MANAGER or ARRANGER.	palgrave	44.07	13.8	0	8.13	12.7	9.65	18.5	16.73
PRIMA FACIE	Appearance of truth that is taken as fact, until there is evidence to the contrary.	palgrave	64.71	8	0	8.05	7.7	7.54	8.5	11.33
PRIMACY	In INSURANCE, a rule that indicates which specific insurance coverage takes precedence when multiple coverage exists, in order to avoid dis- pute or conflict. See also APPORTIONMENT, DIVIDED COVER, OVERLAPPING INSURANCE, PRO-RATA.	palgrave	21.4	14.3	0	16.88	15.9	12.82	14	16.4
PRIMARY LAYER	The main layer of INSURANCE coverage in PROPERTY AND CASUALTY INSURANCE, which exists between the DEDUCTIBLE and the POLICY CAP. The primary layer bears the initial losses once the deductible has been met. Also known as BURNING LAYER.	palgrave	50.12	9.4	11.9	11.3	9.3	10.08	7.666667	11.4
PRIMARY MARKET	The general marketplace for the FLOTATION of NEW ISSUE SECURITIES, including NOTES, BONDS, COMMON STOCK, PREFERRED STOCK, and CONVERTIBLE BONDS, on behalf of corporate or sovereign ISSUERS. Once securities are placed and the UNDERWRITING SYNDICATE “breaks” the primary market phase is concluded. Any subsequent TRADING activity forms part of the SECONDARY MARKET.	palgrave	37	12.4	15.5	16.24	15.5	12.39	13.333333	16.15
PRIMARY OFFERING	The sale of a corporate or sovereign ISSUER’s SECURITIES in the PRIMARY MARKET, including INITIAL PUBLIC OFFERINGS and DEBT NEW ISSUES. Subsequent new issues launched in the primary mar- ket are considered SECONDARY OFFERINGS.	palgrave	37.3	12.3	0	14.67	13.8	11.91	13.5	16.21
PRIME BROKER	A BANK, INVESTMENT BANK, or SECURITIES DEALER that provides HEDGE FUNDS and other institutional INVESTORS with a full range of AGE services.	palgrave	49.15	11.9	0	13.29	15.1	11.9	14	14.25
PRIME BROKERAGE	A suite of services provided by a PRIME BROKER to institutional clients (including HEDGE FUNDS and other large INVESTORS) that includes trade EXECUTION, SECURITIES lending and financing, trade SETTLEMENT, CUSTODY, PORTFOLIO analysis, and valuation and reporting. See also SYNTHETIC .	palgrave	17.84	15.6	0	17.69	17.8	13.51	16	19.08
PRIME RATE	In the United States, a semifloating INTEREST RATE reflect- ing the unsecured lending rate that BANKS charge their best corporate customers.	palgrave	50.16	11.5	0	15.03	16	11.45	14.5	16.02
PRIME RATE FUND	A MUTUAL FUND or CLOSED-END FUND that invests primarily in corporate LOANS tied to the PRIME RATE. Prime rate funds fea- ture limited LIQUIDITY as a result of the ILLIQUID nature of the SECONDARY MARKET for corporate loans.	palgrave	60.65	9.5	0	10.5	11.1	12.06	12.5	12.86
PRINCIPAL	(1) The primary, or authorizing, party in a transaction or busi- ness relationship. (2) The FACE VALUE of a financial transaction, such as a LOAN, BOND, or SWAP. (1) See also AGENT. (2) See also NOTIONAL.	palgrave	34.94	17.3	0	7.61	18.7	11.12	25	21.07
PRINCIPAL-ONLY (PO) STRIP	A component of a stripped MORTGAGE- BACKED SECURITY or COLLATERALIZED MORTGAGE OBLIGATION that is entitled only to PRINCIPAL payments from the underlying SECURITIES; INTEREST COUPONS are redirected to the INTEREST-ONLY (IO) STRIP. The price of a PO strip declines as INTEREST RATES rise since higher rates slow REFINANCING and result in slower principal repayments. Since PO strips lack the additional CASH FLOW buffer generated by the coupons, they feature more price VOLATILITY than other FIXED INCOME securities.	palgrave	28.47	15.7	17.5	15.38	18.3	11.47	19.166667	18.07
PRINCIPAL PROTECTED BOND	See GUARANTEED PRINCIPAL BOND.	palgrave	33.58	9.6	0	14.5	12.4	15.68	3	21.6
PRIOR LIEN BOND	A BOND, often issued in a corporate REORGANIZATION, that gives INVESTORS a first CLAIM on the issuer’s ASSETS, even if the SECURITY is equally senior to other outstanding securities.	palgrave	25.12	17	0	13.3	18.1	12.7	19.5	18.5
PRIOR-PERIOD ADJUSTMENTS	Significant changes to a company’s finan- cial accounts based on changes in ACCOUNTING policies or the correction of errors, which must be reflected in the RETAINED EARNINGS account.	palgrave	43.06	14.2	0	14.51	18.7	12.92	19	18.34
PRIOR PREFERRED STOCK	PREFERRED STOCK that ranks senior to a com- pany’s other preferred stock issues. Within the preferred stock class, prior pre- ferreds are entitled to a first CLAIM on DIVIDENDS, and in a BANKRUPTCY and LIQUIDATION scenario, a first claim on the company’s ASSETS. See alsoSECONDARY PREFERRED STOCK.	palgrave	64	8.2	11.2	12.41	11.6	10.8	8.833333	11.39
PRIVATE BANK	(1) A BANK that specializes in wealth management ser- vices for high NET WORTH clients, including INVESTMENT MANAGEMENT, TRUST and CUSTODY services, FOREIGN EXCHANGE, and so forth. It may be established as a separate unit or division of a large international bank, or as a dedicated, stand-alone entity. (2) A bank that is not publicly owned.	palgrave	43.06	14.2	0	11.2	16.7	10.66	19.5	17.63
PRIVATE BANKER	A professional working at a BANK that is primarily respon- sible for managing the INVESTMENT PORTFOLIOS of high net worth individ- uals on a discretionary or nondiscretionary basis, and providing associated TRUST and CREDIT services. See also BANKER, FINANCIER, INVESTMENT BANKER.	palgrave	33.75	13.6	0	15.66	16.4	11.59	15.75	17.96
PRIVATE COMPANY	A company whose SHARES are held by the DIRECTORS and SHAREHOLDERS, but which do not trade publicly. A private company is not typically subject to the same public disclosure rules as PUBLIC COMPANIES. See also CLOSE COMPANY, CLOSELY HELD COMPANY.	palgrave	49.52	9.7	13	11.01	9.5	8.24	8.666667	10.32
PRIVATE LIMITED COMPANY	A corporate entity that offers LIMITED LIABILITY to its SHAREHOLDERS but which restricts the ability of shareholders to sell their SHARES in the open market or without first offering them to exist- ing shareholders. Private limited companies generally do not have to adhere to the same financial disclosure requirements as PUBLIC COMPANIES.	palgrave	28.17	15.8	0	14.92	17.8	10.7	21	19.63
PRIVATE PLACEMENT	A DEBT SECURITY that is not registered with a REGULATOR and can therefore only be sold on a CAVEAT EMPTOR basis to a very limited number of sophisticated INVESTORS. Private placements are highly ILLIQUID and are generally only transferable to the original SYNDICATE or other QUALIFIED INSTITUTIONAL BUYERS when REGULATIONS permit. In the United States, a SAFE HARBOR RULE is provided by SECURITIES AND EXCHANGE COMMISSION RULE 144A, which allows limited resale of secur- ities that have not been registered. See also PRIVATE PLACING, REGISTRATION STATEMENT.	palgrave	32.73	14	15.2	14.04	15.2	11.13	15.25	16.04
PRIVATE PLACING	In the United Kingdom, a PRIVATE PLACEMENT.	palgrave	64.37	6	0	9.06	7	8.5	2.5	2.8
PRIVATIZATION	The act of converting a government or state-run company into a publicly owned company. The privatization typically generates a wind- fall gain for the government, and allows the company to operate as a private enterprise (though the government may retain a GOLDEN SHARE for a speci- fied period of time).	palgrave	37.64	14.2	0	11.67	15.1	9.3	19	15.6
PRO-FORMA	Literally “as a formality;” in the financial sector it relates to the presentation of hypothetical or projected corporate BALANCE SHEET,	palgrave	8.88	17	0	16.07	16.1	12.52	17	22
PRO-FORMA EARNINGS REPORT	A FINANCIAL STATEMENT that expresses PROFITS by excluding exceptional costs or including exceptional gains; although pro-forma reports are widely used by companies and analysts, they do not typically conform to GENERALLY ACCEPTED ACCOUNTING PRINCIPLES or INTERNATIONAL ACCOUNTING STANDARDS and must be interpreted with care.	palgrave	-15.49	26.4	0	20.15	30.7	14.79	39	30.33
PRO-FORMA INCOME STATEMENT	A projected INCOME STATEMENT for a future period prepared by a company for internal management purposes; such pro-forma income statements are not released publicly. Income state- ment can be projected using the ANALYSIS OF ACCOUNTS method or the PERCENTAGE OF SALES METHOD. See also PRO-FORMA BALANCE SHEET, PRO-FORMA EARNINGS REPORT.	palgrave	37.6	12.2	14.6	14.44	13.8	11.41	12.333333	12.28
PRO-RATA	Literally “proportional allocation;” in the financial sector it reflects an allocation of NEW ISSUE SECURITIES to INVESTORS in proportion to the ORDERS submitted. In INSURANCE, it relates to a clause in a CONTRACT indicating that any SETTLEMENT to the INSURED will be in proportion to the total amount of insurance in force on the same PERIL. See also APPORTION-MENT, DIVIDED COVER, OVERLAPPING INSURANCE, PRIMACY.	palgrave	24.48	15.1	17.1	13.69	15	11.11	16.666667	16.65
PROBABILITY	A statistical measure that indicates the likelihood or chance that an event will occur. Probability is widely used to measure uncertain or risky events, including those impacting the financial markets.	palgrave	39.33	11.5	0	14.78	13.1	11.75	11.5	16.67
PROBABILITY OF RUIN	The likelihood that the distribution of average losses exceeds a BENCHMARK SOLVENCY value (i.e., a minimum amount of CAPITAL surplus or tangible NET WORTH), leading to a company’s BANKRUPTCY. Probability of ruin is incorporated in certain DEFAULT models.	palgrave	18.35	15.4	0	14.62	15	12.47	15	18.13
PROCESS RISK	See OPERATIONAL RISK.	palgrave	34.59	9.2	0	9.23	9.9	14.31	1.5	14.53
PRODUCER PRICE INDEX	An INFLATION measure at the wholesale level based on production components by COMMODITY, industry, and processing stage. The producer price INDEX may measure the prices of underlying goodsand commodities, but not associated services (in the United States the com- plete index includes volatile food and energy components, while the core index excludes both). See also CONSUMER PRICE INDEX, HARMONIZED INDEX OF CONSUMER PRICES, RETAIL PRICE INDEX.	palgrave	40.69	13.1	15	15.14	16.7	10.95	15.333333	16.07
PRODUCT GUARANTEE INSURANCE	A form of INSURANCE cover that provides the INSURED with restitution in the event a product it introduces to the marketplace is found to be defective, and which requires a recall and refund or repair. See also PRODUCT LIABILITY INSURANCE.	palgrave	42.72	12.3	0	11.14	12	9.76	13.5	14
PRODUCT LIABILITY INSURANCE	A form of INSURANCE cover that pro- vides the INSURED with restitution in the event a product it introduces into the marketplace is found to be defective, and creates a legal LIABILITY. See alsoPRODUCT GUARANTEE INSURANCE.	palgrave	36.28	12.7	0	11.89	12	11.11	13.5	16.09
PROFIT	Any excess or surplus remaining after all costs have been subtracted from the REVENUE or selling price of a good or service or any surplus arising from the disposal of an asset at a price that is favorable compared to its original contract price. See also LOSS.	palgrave	56.08	11.3	0	9.29	11.8	9.51	14.25	13.66
PROFIT AND LOSS ACCOUNT	In the United Kingdom, the INCOME STATEMENT.	palgrave	64.37	6	0	9.87	7.6	6.24	2.5	2.8
PROFIT FORECAST	An estimate provided by a company or developed by an INVESTMENT ANALYST related to expected PROFITS for a forthcoming period.	palgrave	8.88	17	0	13.17	13.5	12.52	20	26
PROFIT MARGIN	See NET .	palgrave	77.91	2.9	0	-13.21	-4	0.1	0.5	0.8
PROFIT TAKING	The process of selling or covering an ASSET, INVESTMENT or other financial transaction in order to crystallize UNREALIZED PROFITS, converting them into REALIZED GAINS.	palgrave	13.28	17.4	0	17.12	18.8	13.38	20	22.93
PROFIT WARNING	A preemptive statement issued by a company to the marketplace in advance of a formally scheduled earnings announcement that indicates an impending shortfall in PROFITS expected to be reported during the official reporting period. See also PREANNOUNCEMENT.	palgrave	18.86	15.2	0	16.71	15.7	12.66	15.75	20.37
PROFITABILITY INDEX	A method of determining the advisability of mak- ing a CAPITAL INVESTMENT based on the NET PRESENT VALUE framework. The profitability index can be computed as:where PVin is the PRESENT VALUE of cash inflows, PVout is the present value of cash outflows.In general, if PI > 1.0 the investment is expected to create value for SHAREHOLDERS and should be accepted; if PI < 1.0 the investment should be rejected, and if PI = 1.0, then the company should be indifferent. See alsoINTERNAL RATE OF RETURN.	palgrave	43.77	13.9	16.3	10.97	15.9	10	19.5	16.29
PROFITEER	An individual or company that charges exorbitant prices for goods and services that are in short SUPPLY during a time of crisis (natural disaster, war).	palgrave	37.64	14.2	0	11.78	15.2	10.56	17.5	16.4
PROGRAM TRADING	(1) The general process of executing TRADES in finan- cial ASSETS through computerized platforms and customized ALGORITHMS.(2) See INDEX ARBITRAGE.	palgrave	17.34	15.8	0	17.81	18.7	15.68	16	18
PROGRESSIVE TAX	A TAX scheme which directly or indirectly places a greater burden on higher income households by increasing the tax rate on the amount subject to taxation. INCOME taxes and luxury goods taxes are consid- ered progressive taxes. See also PROPORTIONAL TAX, REGRESSIVE TAX.	palgrave	48.5	10	12.5	12.23	10.7	10.59	8.833333	13.16
PROHIBITED RISK	See UNINSURABLE RISK.	palgrave	59.97	5.6	0	9.23	9.9	14.31	1.5	14.53
PROJECT FINANCING	See PROJECT FINANCE.	palgrave	93.81	0.9	0	7.32	8.3	14.31	0.5	1.2
PROMISED YIELD	See YIELD TO MATURITY.	palgrave	50.5	7.2	0	2.9	2.9	11.73	2	11.6
PROMISSORY NOTE	A written promise by one party to pay another party a stated sum on a certain date or upon presentation; the promise represents the maker’s LIABILITY. A promissory note may be transferred to another party as a NEGOTIABLE INSTRUMENT through an ENDORSEMENT; the act of endors- ing the note allows the BENEFICIARY to convert it into cash. Also known as NOTE.	palgrave	42.41	12.4	13.6	10.21	11.5	8.53	13.5	13.37
PROMPT DATE	The specific date on which payment is due from the buyer on a good purchased from a seller.	palgrave	78.59	6.8	0	5.97	6.9	8.04	9	9.42
PROMPT MONTH	See NEARBY CONTRACT.	palgrave	59.97	5.6	0	7.32	8.3	9.05	0.5	1.2
PROOF OF LOSS	Documentary evidence an INSURED must present an INSURER when submitting a CLAIM under an INSURANCE policy. Since an insurance CONTRACT requires the insured to have an INSURABLE INTEREST, proof of loss is an essential element in ensuring validity.	palgrave	26.81	14.2	0	14.16	14	11.64	16	20.23
PROPERTY INSURANCE	See PROPERTY AND CASUALTY INSURANCE.	palgrave	-1.29	14.7	0	14.24	11.2	13.36	4.5	26
PROPERTY TAX	A TAX levied on various forms of real estate, including resi- dential homes, commercial buildings, and undeveloped land. Schemes for levying property tax depend on national and local practice, but generally cen- ter on applying a percentage amount on an appraised value.	palgrave	41.7	12.7	0	13.23	14.7	13.33	15	16.97
PROPORTIONAL TAX	A TAX scheme where the tax rate is fixed as the amount subject to taxation increases, implying an equal burden on high- and low-income households, though in practice may be regressive in certain areas, e.g., consumption. In practice proportional taxes are relatively uncommon. Also known as FLAT TAX. See also PROGRESSIVE TAX, REGRESSIVE TAX.	palgrave	57.77	8.6	12.6	11.77	10.5	9.57	8.5	12.07
PROPORTIONAL TREATY	See PROPORTIONAL AGREEMENT.	palgrave	9.21	12.7	0	20.83	19.3	14.31	1.5	14.53
PROSPECTIVE FINITE POLICY	An INSURANCE POLICY that seeks primar- ily to shift the timing risk of losses that are expected to occur in the future. In common with other FINITE RISK POLICIES, the prospective agreement is primarily a RISK FINANCING rather than RISK TRANSFER vehicle. See alsoRETROSPECTIVE FINITE POLICY.	palgrave	47.49	10.4	12.5	12.4	11.3	11.95	10.333333	12.21
PROTECTED BID	A BID quotation on a STOCK that is displayed via an ELECTRONIC TRADING center, is disseminated via a national market system and is the best bid available in the market. See also PROTECTED OFFER.	palgrave	54.22	9.9	0	9.39	9.4	9.12	11	12.68
PROTECTED CELL COMPANY	A multiuser CAPTIVE with individual accounts (“cells”) that clients hire for SELF-INSURANCE programs. Individual cells are separated by statute, which prevents commingling of ASSETS and RISKS, and ensures the assets of each client remain safe in the event other cell clients encounter FINANCIAL DISTRESS. Protected cell companies are widely used by firms that are interested in self-insurance but do not want to estab- lish and manage a captive of their own. See also AGENCY CAPTIVE, GROUP CAPTIVE, PURE CAPTIVE, RENT-A-CAPTIVE, CAPTIVE, SENIOR CAPTIVE, SISTER CAPTIVE.	palgrave	41.4	12.8	12.6	14.5	16.1	10.08	13.375	11.81
PROTECTED OFFER	An OFFER quotation on a STOCK that is displayed via an ELECTRONIC TRADING center, is disseminated via a national market system and is the best offer available in the market. See also PROTECTED BID.	palgrave	54.22	9.9	0	9.92	9.8	9.12	11	12.68
PROTECTION BUYER	An institution that buys a CREDIT DERIVATIVE con- tract for a PREMIUM, creating a SHORT position in the CREDIT DEFAULT RISK of the REFERENCE ENTITY or REFERENCE OBLIGATION. See alsoPROTECTION SELLER.	palgrave	30.36	12.9	0	13.28	12	12.55	12.75	17.81
PROTECTION PAYMENT	The amount due to the PROTECTION BUYER from the PROTECTION SELLER in the event a REFERENCE ENTITY or REFERENCE OBLIGATION triggers a DEFAULT under a CREDIT DERIVATIVE contract.	palgrave	26.14	16.6	0	13.7	17.6	11.79	21	18.34
PROTECTION SELLER	An institution that sells a CREDIT DERIVATIVE con- tract for a PREMIUM, creating a LONG position in the CREDIT DEFAULT RISK of the REFERENCE ENTITY or REFERENCE OBLIGATION. See also PROTECTION BUYER.	palgrave	38.32	11.9	0	12.18	11.3	12.33	13	17.65
PROTECTIVE STOP	Any INVESTMENT strategy that employs a STOP ORDER to protect downside RISK.	palgrave	50.84	9.2	0	12.28	9.7	10.81	7	11.47
PROTEST	A certification sought by a holder of PROMISSORY NOTE or BILL OF EXCHANGE that has been dishonored or refused payment, typically required in order to commence legal proceedings.	palgrave	26.14	16.6	0	13.7	17.8	10.66	19	18.34
PROXY	(1) A document that conveys a COMMON STOCK SHAREHOLDER’s right to vote. (2) A person or institution authorized to vote on behalf of a shareholder.	palgrave	46.1	13	0	9.93	14.1	11.19	17.5	18
PROXY FIGHT	See PROXY CONTEST.	palgrave	93.81	0.9	0	3.43	5.2	14.31	0.5	1.2
PRUDENTIAL RATIO	See CAPITAL ADEQUACY RATIO.	palgrave	-8.73	15.5	0	10.15	8.8	11.73	3	11.6
PUBLIC COMPANY	A company that has issued SHARES to INVESTORS through an INITIAL PUBLIC OFFERING, and which is listed and traded on a STOCK EXCHANGE. See also LISTED COMPANY, PRIVATE COMPANY	palgrave	56.76	8.9	0	10.72	9.5	8.71	8.25	7.18
PUBLIC DEBT	Any form of DEBT incurred by a government and its directAGENTS.	palgrave	68.77	6.4	0	8.97	6.8	8.49	6.5	8.04
PUBLIC FINANCE	A field of study within FINANCE centered on govern- ment REVENUES (e.g., TAXES), EXPENSES, and DEBT, and how these impact an economy and its STAKEHOLDERS.	palgrave	54.56	11.9	0	10.86	15.6	13.09	15.5	14.8
PUBLIC ISSUE	See PUBLIC OFFERING.	palgrave	34.59	9.2	0	7.32	8.3	9.05	1.5	14.53
PUBLIC LIMITED COMPANY (PLC)	In the United Kingdom a corporate entity with LIMITED LIABILITY, registered under the Companies Act, which is publicly listed and traded.	palgrave	16.32	16.2	0	14.21	15.3	11.45	16.5	19.83
PUBLIC OFFERING	A form of NEW ISSUE in which the ISSUER invites the public to INVEST in SHARES or other SECURITIES directly, without the use of an INTERMEDIARY. Also known as PUBLIC ISSUE.	palgrave	55.74	9.3	0	8.41	7.9	8.48	8.25	10.07
PUBLIC SECTOR	The broad component of the economy that is related to the government, which typically centers on social services, health, defense, and any state-run CORPORATIONS.	palgrave	30.2	15	0	15.15	17.8	10.09	18	17.93
PUBLISHED ACCOUNTS	In the United Kingdom, the minimum elements of FINANCIAL STATEMENTS of companies that are required to file such under law.	palgrave	42.72	12.3	0	12.01	12.8	9.37	14	16
PUFFERY	A legal, if questionable, sales practice where BROKERS pro- mote the positive aspects/upside of a potential INVESTMENT while deemphasiz- ing RISKS/negative points in order to entice clients to invest.	palgrave	33.58	15.8	0	16.31	21	15.42	21.5	19.88
PUKE POINT	A capitulation price, or the price at which a DEALER or TRADER decides to sell some, or all, of a money-losing position.	palgrave	57.61	10.7	0	7.49	10.8	9.03	14	12.44
PULL TO PAR	A phenomenon where the price of a FIXED INCOME SECURITY will migrate toward its PAR VALUE as MATURITY approaches. This occurs because the INVESTOR receives REDEMPTION value (i.e., par value) once the security is redeemed by the ISSUER. Also known as PULL TO REDEMPTION.	palgrave	48.09	10.2	11.9	10.84	10.1	9.39	8.666667	10.43
PUNT	(1) A risky or speculative position. (2) The act ofSPECULATION.	palgrave	35.95	10.7	0	9.08	9	13.61	7	16

PREPACK

See AGED BANKRUPTCY.

palgrave

0

59.97

5.6

0

7.32

8.3

9.05

1.5

14.53

PREPAYMENT

(1) The early repayment of a MORTGAGE by a BORROWER as a result of the sale of the underlying home/property or a REFINANCING to take advantage of a lower INTEREST RATE environment. (2) The payment of any sum of money for goods or services that have not yet been received. A prepayment is reflected as an ASSET on the BALANCE SHEET. (1) See alsoPREPAYMENT MODEL, PREPAYMENT SPEED.

palgrave

0

37.47

16.4

0

9.35

17.3

10.25

22.75

19.97

PREPAYMENT MODEL

An analytic process used to estimate the PREPAYMENT SPEED of MORTGAGES comprising a POOL or PASS-THROUGH SECURITY, which can then be used to value the ASSET. Common mod- els include the constant prepayment rate model, which assumes mortgagePRINCIPAL prepayments occur at a constant annual rate that can be estimated from historical mortgage data, and the Public Securities Association standard prepayment model, which assumes mortgage PREPAYMENTS occur at variable speeds (e.g., 0.2%/month for 30 months, then 6% annually).

palgrave

0

15.48

20.7

0

15.62

25.2

12.93

27.25

22.15

PREPETITION PHASE

A stage of FINANCIAL DISTRESS, such as the VICINITY OF INSOLVENCY, when a company is preparing to file a BANKRUPTCY petition. During this period the rights of CREDITORS often supersede those of SHAREHOLDERS, as DIRECTORS and executives attempt to preserve as much ENTERPRISE VALUE as possible in advance of a REORGANIZATION or LIQUIDATION.

palgrave

0

19.2

17.2

0

13.87

17.3

10.91

21.75

21.92

PRE-REFUNDING

A new BOND issue floated by a company in order to repay an existing bond issue at the FIRST CALL DATE; proceeds of the pre-refunding are generally invested in low-RISK SECURITIES until the original bond can be called and redeemed. Pre-refunding typically occurs in an environment where INTEREST RATES have declined enough to make the REFINANCING an eco- nomically beneficial process.

palgrave

0

23.6

17.5

0

13.36

18.8

11.62

22.25

20.07

PRESENT EXPECTED VALUE

An ACTUARIAL PRICING method of calculat- ing PREMIUM for INSURANCE coverage, generally via:PEV = Probocc (Facepol) (PVfactor)where Probocc is the PROBABILITY of loss occurrence, Facepol is the FACE VALUE of the POLICY, and PVfactor is a PRESENT VALUE factor.

palgrave

0

-0.94

22.8

0

15.21

24.8

13.42

31.5

25.73

PRESENT VALUE

A financial computation where future CASH FLOWS are discounted back to current terms through use of an appropriate DISCOUNT RATE or COST OF CAPITAL. The general form of the equation is given as:PV = CF (1 + r )twhere CF is the future cash flow, r is the discount rate, t is the future period.The present value of a cash flow that is subject to CONTINUOUS DISCOUNTING is given as:where e is the exponential constant, N is the number of years over which the compounding occurs.The computation for multiple periods is given as:t =1 (1 + r )twhere CFt is the expected cash flow at time t, n is the number of periods, and other terms are as defined above.The present value of a recurring cash flow, as in an ANNUITY, is given as:11 ⎤⎣ rSee also DISCOUNTED CASH FLOW, FUTURE VALUE, NET PRESENT VALUE.

palgrave

0

7.87

29.8

0

9.37

35.6

11.27

32.5

32.34

PRESENTING BANK

A BANK that seeks payment on a BILL OF EXCHANGE, DRAFT, or CHECK from the bank on which the order has been drawn.

palgrave

0

90.43

6.4

0

5.23

8.7

6.84

11.5

9.2

PRESETTLEMENT RISK

See FRACTIONAL EXPOSURE.

palgrave

0

9.21

12.7

0

15.03

14.6

14.31

2.5

27.87

PRESIDING DIRECTOR

See LEAD INDEPENDENT DIRECTOR.

palgrave

0

8.2

13.1

0

14.5

12.4

11.73

3

21.6

PRICE-BOOK RATIO

A measure that compares market and ACCOUNTING values to determine potential undervaluation or overvaluation of a company. Price-book is generally computed via:where S is the current STOCK price and BVPS is BOOK VALUE per share.A high ratio, or an increasing ratio over time, may indicate a growth stock, while a low ratio may suggest an opportunity to purchase the stock of a com- pany that has not realized its valuation potential.

palgrave

0

26.98

18.3

0

12.14

20.3

10.96

24.75

20.96

PRICE COMPRESSION

A phenomenon where the price of a CALLABLE BOND remains close to its call redemption price in a declining INTEREST RATE environment since the likelihood of a call, redemption, and REFINANCING increases.

palgrave

0

30.54

17

0

13.76

19.7

10.65

25

22.8

PRICE CONTROL

Caps or ceilings placed by a government authority on spe- cific goods or services, generally as an attempt to control INFLATION. Price controls run contrary to free market economic principles and are more charac- teristic of certain COMMAND ECONOMIES.

palgrave

0

43.22

12.1

0

13.63

14

12.3

13.25

13.95

PRICE DISCOVERY

The process of establishing a fair market price for an ASSET through the interaction of buyers and sellers via AUCTION or quotation,typically through an organized marketplace such as a physical or electronicEXCHANGE.

palgrave

0

22.08

18.1

0

16.49

21.8

12.13

23

22.8

PRICE/EARNINGS (P/E) RATIO

A measure of a company’s value and EARNINGS RISK, computed from the latest reported earnings in the general form of:where S is the STOCK price and EPS is EARNINGS PER SHARE.

palgrave

0

48.47

14.2

0

9.53

15.8

9.76

19.5

16.27

PRICE ELASTICITY

The ratio of a proportional change in quantity supplied or demanded for a proportional change in price; the greater the price elas- ticity, the more sensitive SUPPLY or DEMAND to changes in price. See alsoELASTICITY.

palgrave

0

27.49

18.1

0

12.66

20.6

11.24

24.5

20.86

PRICE KEEPING OPERATIONS

A technique used by the Japanese monet- ary authorities to “encourage” its FINANCIAL INSTITUTIONS to actively buy SECURITIES in order to provide price supports at key levels.

palgrave

0

18.69

17.4

0

14.39

17.9

12.58

20.5

21.17

PRICE LEVEL ACCOUNTING

See INFLATION ACCOUNTING.

palgrave

0

9.21

12.7

0

16.95

16.2

14.31

2.5

27.87

PRICE LIMIT

A boundary placed on certain EXCHANGE-traded ASSETS (e.g., FUTURES, OPTIONS, COMMON STOCKS) that limits the amount of upward or downward price movement that can occur during a TRADING session. A price limit is a form of CIRCUIT BREAKER that is intended to control excessive VOLATILITY and/or market overreaction.

palgrave

0

38.66

13.8

0

13.7

16.6

12.72

14.5

12.93

PRICE SPREAD

See BEAR SPREAD, BULL SPREAD.

palgrave

0

117.16

-1.9

0

4.96

4.6

0.25

1.5

2

PRICE SUPPORT

A floor placed by a government authority on the price of a particular good, often an agricultural COMMODITY, typically implemented through the purchase of a particular amount of the good or the payment of any price differential between the agreed floor and the open market price.

palgrave

0

16.33

22.4

0

12.72

25.5

9.35

32

24.49

PRICE TAKER

A small INVESTOR that has no ability to impact or influ- ence SECURITIES prices, and must simply accept the BID or OFFER in the marketplace.

palgrave

0

54.56

11.9

0

9.23

12.9

10.56

15.5

14.8

PRICE TALK

An estimate of the potential pricing on a NEW ISSUE of SECURITIES or a LOAN based on presoundings in the market by the LEAD MANAGER or ARRANGER.

palgrave

0

44.07

13.8

0

8.13

12.7

9.65

18.5

16.73

PRIMA FACIE

Appearance of truth that is taken as fact, until there is evidence to the contrary.

palgrave

0

64.71

8

0

8.05

7.7

7.54

8.5

11.33

PRIMACY

In INSURANCE, a rule that indicates which specific insurance coverage takes precedence when multiple coverage exists, in order to avoid dis- pute or conflict. See also APPORTIONMENT, DIVIDED COVER, OVERLAPPING INSURANCE, PRO-RATA.

palgrave

0

21.4

14.3

0

16.88

15.9

12.82

14

16.4

PRIMARY LAYER

The main layer of INSURANCE coverage in PROPERTY AND CASUALTY INSURANCE, which exists between the DEDUCTIBLE and the POLICY CAP. The primary layer bears the initial losses once the deductible has been met. Also known as BURNING LAYER.

palgrave

0

50.12

9.4

11.9

11.3

9.3

10.08

7.666667

11.4

PRIMARY MARKET

The general marketplace for the FLOTATION of NEW ISSUE SECURITIES, including NOTES, BONDS, COMMON STOCK, PREFERRED STOCK, and CONVERTIBLE BONDS, on behalf of corporate or sovereign ISSUERS. Once securities are placed and the UNDERWRITING SYNDICATE “breaks” the primary market phase is concluded. Any subsequent TRADING activity forms part of the SECONDARY MARKET.

palgrave

0

37

12.4

15.5

16.24

15.5

12.39

13.333333

16.15

PRIMARY OFFERING

The sale of a corporate or sovereign ISSUER’s SECURITIES in the PRIMARY MARKET, including INITIAL PUBLIC OFFERINGS and DEBT NEW ISSUES. Subsequent new issues launched in the primary mar- ket are considered SECONDARY OFFERINGS.

palgrave

0

37.3

12.3

0

14.67

13.8

11.91

13.5

16.21

PRIME BROKER

A BANK, INVESTMENT BANK, or SECURITIES DEALER that provides HEDGE FUNDS and other institutional INVESTORS with a full range of AGE services.

palgrave

0

49.15

11.9

0

13.29

15.1

11.9

14

14.25

PRIME BROKERAGE

A suite of services provided by a PRIME BROKER to institutional clients (including HEDGE FUNDS and other large INVESTORS) that includes trade EXECUTION, SECURITIES lending and financing, trade SETTLEMENT, CUSTODY, PORTFOLIO analysis, and valuation and reporting. See also SYNTHETIC .

palgrave

0

17.84

15.6

0

17.69

17.8

13.51

16

19.08

PRIME RATE

In the United States, a semifloating INTEREST RATE reflect- ing the unsecured lending rate that BANKS charge their best corporate customers.

palgrave

0

50.16

11.5

0

15.03

16

11.45

14.5

16.02

PRIME RATE FUND

A MUTUAL FUND or CLOSED-END FUND that invests primarily in corporate LOANS tied to the PRIME RATE. Prime rate funds fea- ture limited LIQUIDITY as a result of the ILLIQUID nature of the SECONDARY MARKET for corporate loans.

palgrave

0

60.65

9.5

0

10.5

11.1

12.06

12.5

12.86

PRINCIPAL

(1) The primary, or authorizing, party in a transaction or busi- ness relationship. (2) The FACE VALUE of a financial transaction, such as a LOAN, BOND, or SWAP. (1) See also AGENT. (2) See also NOTIONAL.

palgrave

0

34.94

17.3

0

7.61

18.7

11.12

25

21.07

PRINCIPAL-ONLY (PO) STRIP

A component of a stripped MORTGAGE- BACKED SECURITY or COLLATERALIZED MORTGAGE OBLIGATION that is entitled only to PRINCIPAL payments from the underlying SECURITIES; INTEREST COUPONS are redirected to the INTEREST-ONLY (IO) STRIP. The price of a PO strip declines as INTEREST RATES rise since higher rates slow REFINANCING and result in slower principal repayments. Since PO strips lack the additional CASH FLOW buffer generated by the coupons, they feature more price VOLATILITY than other FIXED INCOME securities.

palgrave

0

28.47

15.7

17.5

15.38

18.3

11.47

19.166667

18.07

PRINCIPAL PROTECTED BOND

See GUARANTEED PRINCIPAL BOND.

palgrave

0

33.58

9.6

0

14.5

12.4

15.68

3

21.6

PRIOR LIEN BOND

A BOND, often issued in a corporate REORGANIZATION, that gives INVESTORS a first CLAIM on the issuer’s ASSETS, even if the SECURITY is equally senior to other outstanding securities.

palgrave

0

25.12

17

0

13.3

18.1

12.7

19.5

18.5

PRIOR-PERIOD ADJUSTMENTS

Significant changes to a company’s finan- cial accounts based on changes in ACCOUNTING policies or the correction of errors, which must be reflected in the RETAINED EARNINGS account.

palgrave

0

43.06

14.2

0

14.51

18.7

12.92

19

18.34

PRIOR PREFERRED STOCK

PREFERRED STOCK that ranks senior to a com- pany’s other preferred stock issues. Within the preferred stock class, prior pre- ferreds are entitled to a first CLAIM on DIVIDENDS, and in a BANKRUPTCY and LIQUIDATION scenario, a first claim on the company’s ASSETS. See alsoSECONDARY PREFERRED STOCK.

palgrave

0

64

8.2

11.2

12.41

11.6

10.8

8.833333

11.39

PRIVATE BANK

(1) A BANK that specializes in wealth management ser- vices for high NET WORTH clients, including INVESTMENT MANAGEMENT, TRUST and CUSTODY services, FOREIGN EXCHANGE, and so forth. It may be established as a separate unit or division of a large international bank, or as a dedicated, stand-alone entity. (2) A bank that is not publicly owned.

palgrave

0

43.06

14.2

0

11.2

16.7

10.66

19.5

17.63

PRIVATE BANKER

A professional working at a BANK that is primarily respon- sible for managing the INVESTMENT PORTFOLIOS of high net worth individ- uals on a discretionary or nondiscretionary basis, and providing associated TRUST and CREDIT services. See also BANKER, FINANCIER, INVESTMENT BANKER.

palgrave

0

33.75

13.6

0

15.66

16.4

11.59

15.75

17.96

PRIVATE COMPANY

A company whose SHARES are held by the DIRECTORS and SHAREHOLDERS, but which do not trade publicly. A private company is not typically subject to the same public disclosure rules as PUBLIC COMPANIES. See also CLOSE COMPANY, CLOSELY HELD COMPANY.

palgrave

0

49.52

9.7

13

11.01

9.5

8.24

8.666667

10.32

PRIVATE LIMITED COMPANY

A corporate entity that offers LIMITED LIABILITY to its SHAREHOLDERS but which restricts the ability of shareholders to sell their SHARES in the open market or without first offering them to exist- ing shareholders. Private limited companies generally do not have to adhere to the same financial disclosure requirements as PUBLIC COMPANIES.

palgrave

0

28.17

15.8

0

14.92

17.8

10.7

21

19.63

PRIVATE PLACEMENT

A DEBT SECURITY that is not registered with a REGULATOR and can therefore only be sold on a CAVEAT EMPTOR basis to a very limited number of sophisticated INVESTORS. Private placements are highly ILLIQUID and are generally only transferable to the original SYNDICATE or other QUALIFIED INSTITUTIONAL BUYERS when REGULATIONS permit. In the United States, a SAFE HARBOR RULE is provided by SECURITIES AND EXCHANGE COMMISSION RULE 144A, which allows limited resale of secur- ities that have not been registered. See also PRIVATE PLACING, REGISTRATION STATEMENT.

palgrave

0

32.73

14

15.2

14.04

15.2

11.13

15.25

16.04

PRIVATE PLACING

In the United Kingdom, a PRIVATE PLACEMENT.

palgrave

0

64.37

6

0

9.06

7

8.5

2.5

2.8

PRIVATIZATION

The act of converting a government or state-run company into a publicly owned company. The privatization typically generates a wind- fall gain for the government, and allows the company to operate as a private enterprise (though the government may retain a GOLDEN SHARE for a speci- fied period of time).

palgrave

0

37.64

14.2

0

11.67

15.1

9.3

19

15.6

PRO-FORMA

Literally “as a formality;” in the financial sector it relates to the presentation of hypothetical or projected corporate BALANCE SHEET,

palgrave

0

8.88

17

0

16.07

16.1

12.52

17

22

PRO-FORMA EARNINGS REPORT

A FINANCIAL STATEMENT that expresses PROFITS by excluding exceptional costs or including exceptional gains; although pro-forma reports are widely used by companies and analysts, they do not typically conform to GENERALLY ACCEPTED ACCOUNTING PRINCIPLES or INTERNATIONAL ACCOUNTING STANDARDS and must be interpreted with care.

palgrave

0

-15.49

26.4

0

20.15

30.7

14.79

39

30.33

PRO-FORMA INCOME STATEMENT

A projected INCOME STATEMENT for a future period prepared by a company for internal management purposes; such pro-forma income statements are not released publicly. Income state- ment can be projected using the ANALYSIS OF ACCOUNTS method or the PERCENTAGE OF SALES METHOD. See also PRO-FORMA BALANCE SHEET, PRO-FORMA EARNINGS REPORT.

palgrave

0

37.6

12.2

14.6

14.44

13.8

11.41

12.333333

12.28

PRO-RATA

Literally “proportional allocation;” in the financial sector it reflects an allocation of NEW ISSUE SECURITIES to INVESTORS in proportion to the ORDERS submitted. In INSURANCE, it relates to a clause in a CONTRACT indicating that any SETTLEMENT to the INSURED will be in proportion to the total amount of insurance in force on the same PERIL. See also APPORTION-MENT, DIVIDED COVER, OVERLAPPING INSURANCE, PRIMACY.

palgrave

0

24.48

15.1

17.1

13.69

15

11.11

16.666667

16.65

PROBABILITY

A statistical measure that indicates the likelihood or chance that an event will occur. Probability is widely used to measure uncertain or risky events, including those impacting the financial markets.

palgrave

0

39.33

11.5

0

14.78

13.1

11.75

11.5

16.67

PROBABILITY OF RUIN

The likelihood that the distribution of average losses exceeds a BENCHMARK SOLVENCY value (i.e., a minimum amount of CAPITAL surplus or tangible NET WORTH), leading to a company’s BANKRUPTCY. Probability of ruin is incorporated in certain DEFAULT models.

palgrave

0

18.35

15.4

0

14.62

15

12.47

15

18.13

PROCESS RISK

See OPERATIONAL RISK.

palgrave

0

34.59

9.2

0

9.23

9.9

14.31

1.5

14.53

PRODUCER PRICE INDEX

An INFLATION measure at the wholesale level based on production components by COMMODITY, industry, and processing stage. The producer price INDEX may measure the prices of underlying goodsand commodities, but not associated services (in the United States the com- plete index includes volatile food and energy components, while the core index excludes both). See also CONSUMER PRICE INDEX, HARMONIZED INDEX OF CONSUMER PRICES, RETAIL PRICE INDEX.

palgrave

0

40.69

13.1

15

15.14

16.7

10.95

15.333333

16.07

PRODUCT GUARANTEE INSURANCE

A form of INSURANCE cover that provides the INSURED with restitution in the event a product it introduces to the marketplace is found to be defective, and which requires a recall and refund or repair. See also PRODUCT LIABILITY INSURANCE.

palgrave

0

42.72

12.3

0

11.14

12

9.76

13.5

14

PRODUCT LIABILITY INSURANCE

A form of INSURANCE cover that pro- vides the INSURED with restitution in the event a product it introduces into the marketplace is found to be defective, and creates a legal LIABILITY. See alsoPRODUCT GUARANTEE INSURANCE.

palgrave

0

36.28

12.7

0

11.89

12

11.11

13.5

16.09

PROFIT

Any excess or surplus remaining after all costs have been subtracted from the REVENUE or selling price of a good or service or any surplus arising from the disposal of an asset at a price that is favorable compared to its original contract price. See also LOSS.

palgrave

0

56.08

11.3

0

9.29

11.8

9.51

14.25

13.66

PROFIT AND LOSS ACCOUNT

In the United Kingdom, the INCOME STATEMENT.

palgrave

0

64.37

6

0

9.87

7.6

6.24

2.5

2.8

PROFIT FORECAST

An estimate provided by a company or developed by an INVESTMENT ANALYST related to expected PROFITS for a forthcoming period.

palgrave

0

8.88

17

0

13.17

13.5

12.52

20

26

PROFIT MARGIN

See NET .

palgrave

0

77.91

2.9

0

-13.21

-4

0.1

0.5

0.8

PROFIT TAKING

The process of selling or covering an ASSET, INVESTMENT or other financial transaction in order to crystallize UNREALIZED PROFITS, converting them into REALIZED GAINS.

palgrave

0

13.28

17.4

0

17.12

18.8

13.38

20

22.93

PROFIT WARNING

A preemptive statement issued by a company to the marketplace in advance of a formally scheduled earnings announcement that indicates an impending shortfall in PROFITS expected to be reported during the official reporting period. See also PREANNOUNCEMENT.

palgrave

0

18.86

15.2

0

16.71

15.7

12.66

15.75

20.37

PROFITABILITY INDEX

A method of determining the advisability of mak- ing a CAPITAL INVESTMENT based on the NET PRESENT VALUE framework. The profitability index can be computed as:where PVin is the PRESENT VALUE of cash inflows, PVout is the present value of cash outflows.In general, if PI > 1.0 the investment is expected to create value for SHAREHOLDERS and should be accepted; if PI < 1.0 the investment should be rejected, and if PI = 1.0, then the company should be indifferent. See alsoINTERNAL RATE OF RETURN.

palgrave

0

43.77

13.9

16.3

10.97

15.9

10

19.5

16.29

PROFITEER

An individual or company that charges exorbitant prices for goods and services that are in short SUPPLY during a time of crisis (natural disaster, war).

palgrave

0

37.64

14.2

0

11.78

15.2

10.56

17.5

16.4

PROGRAM TRADING

(1) The general process of executing TRADES in finan- cial ASSETS through computerized platforms and customized ALGORITHMS.(2) See INDEX ARBITRAGE.

palgrave

0

17.34

15.8

0

17.81

18.7

15.68

16

18

PROGRESSIVE TAX

A TAX scheme which directly or indirectly places a greater burden on higher income households by increasing the tax rate on the amount subject to taxation. INCOME taxes and luxury goods taxes are consid- ered progressive taxes. See also PROPORTIONAL TAX, REGRESSIVE TAX.

palgrave

0

48.5

10

12.5

12.23

10.7

10.59

8.833333

13.16

PROHIBITED RISK

See UNINSURABLE RISK.

palgrave

0

59.97

5.6

0

9.23

9.9

14.31

1.5

14.53

PROJECT FINANCING

See PROJECT FINANCE.

palgrave

0

93.81

0.9

0

7.32

8.3

14.31

0.5

1.2

PROMISED YIELD

See YIELD TO MATURITY.

palgrave

0

50.5

7.2

0

2.9

11.73

2

11.6

PROMISSORY NOTE

A written promise by one party to pay another party a stated sum on a certain date or upon presentation; the promise represents the maker’s LIABILITY. A promissory note may be transferred to another party as a NEGOTIABLE INSTRUMENT through an ENDORSEMENT; the act of endors- ing the note allows the BENEFICIARY to convert it into cash. Also known as NOTE.

palgrave

0

42.41

12.4

13.6

10.21

11.5

8.53

13.5

13.37

PROMPT DATE

The specific date on which payment is due from the buyer on a good purchased from a seller.

palgrave

0

78.59

6.8

0

5.97

6.9

8.04

9

9.42

PROMPT MONTH

See NEARBY CONTRACT.

palgrave

0

59.97

5.6

0

7.32

8.3

9.05

0.5

1.2

PROOF OF LOSS

Documentary evidence an INSURED must present an INSURER when submitting a CLAIM under an INSURANCE policy. Since an insurance CONTRACT requires the insured to have an INSURABLE INTEREST, proof of loss is an essential element in ensuring validity.

palgrave

0

26.81

14.2

0

14.16

14

11.64

16

20.23

PROPERTY INSURANCE

See PROPERTY AND CASUALTY INSURANCE.

palgrave

0

-1.29

14.7

0

14.24

11.2

13.36

4.5

26

PROPERTY TAX

A TAX levied on various forms of real estate, including resi- dential homes, commercial buildings, and undeveloped land. Schemes for levying property tax depend on national and local practice, but generally cen- ter on applying a percentage amount on an appraised value.

palgrave

0

41.7

12.7

0

13.23

14.7

13.33

15

16.97

PROPORTIONAL TAX

A TAX scheme where the tax rate is fixed as the amount subject to taxation increases, implying an equal burden on high- and low-income households, though in practice may be regressive in certain areas, e.g., consumption. In practice proportional taxes are relatively uncommon. Also known as FLAT TAX. See also PROGRESSIVE TAX, REGRESSIVE TAX.

palgrave

0

57.77

8.6

12.6

11.77

10.5

9.57

8.5

12.07

PROPORTIONAL TREATY

See PROPORTIONAL AGREEMENT.

palgrave

0

9.21

12.7

0

20.83

19.3

14.31

1.5

14.53

PROSPECTIVE FINITE POLICY

An INSURANCE POLICY that seeks primar- ily to shift the timing risk of losses that are expected to occur in the future. In common with other FINITE RISK POLICIES, the prospective agreement is primarily a RISK FINANCING rather than RISK TRANSFER vehicle. See alsoRETROSPECTIVE FINITE POLICY.

palgrave

0

47.49

10.4

12.5

12.4

11.3

11.95

10.333333

12.21

PROTECTED BID

A BID quotation on a STOCK that is displayed via an ELECTRONIC TRADING center, is disseminated via a national market system and is the best bid available in the market. See also PROTECTED OFFER.

palgrave

0

54.22

9.9

0

9.39

9.4

9.12

11

12.68

PROTECTED CELL COMPANY

A multiuser CAPTIVE with individual accounts (“cells”) that clients hire for SELF-INSURANCE programs. Individual cells are separated by statute, which prevents commingling of ASSETS and RISKS, and ensures the assets of each client remain safe in the event other cell clients encounter FINANCIAL DISTRESS. Protected cell companies are widely used by firms that are interested in self-insurance but do not want to estab- lish and manage a captive of their own. See also AGENCY CAPTIVE, GROUP CAPTIVE, PURE CAPTIVE, RENT-A-CAPTIVE, CAPTIVE, SENIOR CAPTIVE, SISTER CAPTIVE.

palgrave

0

41.4

12.8

12.6

14.5

16.1

10.08

13.375

11.81

PROTECTED OFFER

An OFFER quotation on a STOCK that is displayed via an ELECTRONIC TRADING center, is disseminated via a national market system and is the best offer available in the market. See also PROTECTED BID.

palgrave

0

54.22

9.9

0

9.92

9.8

9.12

11

12.68

PROTECTION BUYER

An institution that buys a CREDIT DERIVATIVE con- tract for a PREMIUM, creating a SHORT position in the CREDIT DEFAULT RISK of the REFERENCE ENTITY or REFERENCE OBLIGATION. See alsoPROTECTION SELLER.

palgrave

0

30.36

12.9

0

13.28

12

12.55

12.75

17.81

PROTECTION PAYMENT

The amount due to the PROTECTION BUYER from the PROTECTION SELLER in the event a REFERENCE ENTITY or REFERENCE OBLIGATION triggers a DEFAULT under a CREDIT DERIVATIVE contract.

palgrave

0

26.14

16.6

0

13.7

17.6

11.79

21

18.34

PROTECTION SELLER

An institution that sells a CREDIT DERIVATIVE con- tract for a PREMIUM, creating a LONG position in the CREDIT DEFAULT RISK of the REFERENCE ENTITY or REFERENCE OBLIGATION. See also PROTECTION BUYER.

palgrave

0

38.32

11.9

0

12.18

11.3

12.33

13

17.65

PROTECTIVE STOP

Any INVESTMENT strategy that employs a STOP ORDER to protect downside RISK.

palgrave

0

50.84

9.2

0

12.28

9.7

10.81

7

11.47

PROTEST

A certification sought by a holder of PROMISSORY NOTE or BILL OF EXCHANGE that has been dishonored or refused payment, typically required in order to commence legal proceedings.

palgrave

0

26.14

16.6

0

13.7

17.8

10.66

19

18.34

PROXY

(1) A document that conveys a COMMON STOCK SHAREHOLDER’s right to vote. (2) A person or institution authorized to vote on behalf of a shareholder.

palgrave

0

46.1

13

0

9.93

14.1

11.19

17.5

18

PROXY FIGHT

See PROXY CONTEST.

palgrave

0

93.81

0.9

0

3.43

5.2

14.31

0.5

1.2

PRUDENTIAL RATIO

See CAPITAL ADEQUACY RATIO.

palgrave

0

-8.73

15.5

0

10.15

8.8

11.73

3

11.6

PUBLIC COMPANY

A company that has issued SHARES to INVESTORS through an INITIAL PUBLIC OFFERING, and which is listed and traded on a STOCK EXCHANGE. See also LISTED COMPANY, PRIVATE COMPANY

palgrave

0

56.76

8.9

0

10.72

9.5

8.71

8.25

7.18

PUBLIC DEBT

Any form of DEBT incurred by a government and its directAGENTS.

palgrave

0

68.77

6.4

0

8.97

6.8

8.49

6.5

8.04

PUBLIC FINANCE

A field of study within FINANCE centered on govern- ment REVENUES (e.g., TAXES), EXPENSES, and DEBT, and how these impact an economy and its STAKEHOLDERS.

palgrave

0

54.56

11.9

0

10.86

15.6

13.09

15.5

14.8

PUBLIC ISSUE

See PUBLIC OFFERING.

palgrave

0

34.59

9.2

0

7.32

8.3

9.05

1.5

14.53

PUBLIC LIMITED COMPANY (PLC)

In the United Kingdom a corporate entity with LIMITED LIABILITY, registered under the Companies Act, which is publicly listed and traded.

palgrave

0

16.32

16.2

0

14.21

15.3

11.45

16.5

19.83

PUBLIC OFFERING

A form of NEW ISSUE in which the ISSUER invites the public to INVEST in SHARES or other SECURITIES directly, without the use of an INTERMEDIARY. Also known as PUBLIC ISSUE.

palgrave

0

55.74

9.3

0

8.41

7.9

8.48

8.25

10.07

PUBLIC SECTOR

The broad component of the economy that is related to the government, which typically centers on social services, health, defense, and any state-run CORPORATIONS.

palgrave

0

30.2

15

0

15.15

17.8

10.09

18

17.93

PUBLISHED ACCOUNTS

In the United Kingdom, the minimum elements of FINANCIAL STATEMENTS of companies that are required to file such under law.

palgrave

0

42.72

12.3

0

12.01

12.8

9.37

14

16

PUFFERY

A legal, if questionable, sales practice where BROKERS pro- mote the positive aspects/upside of a potential INVESTMENT while deemphasiz- ing RISKS/negative points in order to entice clients to invest.

palgrave

0

33.58

15.8

0

16.31

21

15.42

21.5

19.88

PUKE POINT

A capitulation price, or the price at which a DEALER or TRADER decides to sell some, or all, of a money-losing position.

palgrave

0

57.61

10.7

0

7.49

10.8

9.03

14

12.44

PULL TO PAR

A phenomenon where the price of a FIXED INCOME SECURITY will migrate toward its PAR VALUE as MATURITY approaches. This occurs because the INVESTOR receives REDEMPTION value (i.e., par value) once the security is redeemed by the ISSUER. Also known as PULL TO REDEMPTION.

palgrave

0

48.09

10.2

11.9

10.84

10.1

9.39

8.666667

10.43

PUNT

(1) A risky or speculative position. (2) The act ofSPECULATION.

palgrave

0

35.95

10.7

0

9.08

9

13.61

7

16