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Partial Fill – a situation when only a portion of the total volume of your buy or sell order trades, leaving the remaining volume unfilled.
Payment Date – date on which a declared stock dividend or a bond interest payment is scheduled to be made.
Pay-Out Ratio – the dividend for a particular time period divided by the earnings for the same time period. Companies often refer to a pay-out ratio “policy”, which usually refers to a target percentage of earnings the company seeks to pay over time. Almost all dividend-paying companies in the U.S. try to maintain a stable dividend per share. In some other countries it is more common for companies to pay both a regular dividend quarterly and an “extra” dividend at the end of the year, depending on how high the earnings were.
Penny Stock – shares that are generally under $5.00 per unit, or companies that have a total market capitalization of only a few million dollars.
Phillips Curve – the relationship between inflation and unemployment, suggesting that lower unemployment is usually accompanied by higher levels of inflation. Originally presented by Professor A. W. Phillips.
Portfolio Insurance – an investment strategy in which an investor, in order to protect a portfolio of stocks, sells index futures or buys index put options.
Position Limit – the maximum number of option contracts “on the same side of the market” which can be held by any one investor or group of related investors. A long call and a short put are on the same side of the market. A long put and a short call are on the same side of the market.
Preferred Stock – a security that shows ownership in a corporation and gives the holder a claim, prior to the claim of common stockholders, on earnings and also generally on assets in the event of liquidation. Most preferred stock pays a fixed dividend, stated in a dollar amount or as a percentage of par value. This stock does not usually carry voting rights.
Premium – the price of an option contract, determined on the exchange, which the buyer of the option pays to the option writer for the rights to the option contract.
Price to Book Ratio – compares a stock’s market value to the value of total assets less total liabilities (book). Determined by dividing current price by common stockholders’ equity per share (book value), adjusted for stock splits. Also called Market to Book.
Price/Earnings Ratio (P/E) – a measure of how much a company earns in relation to its total stock price. Determined by dividing current price by current earnings per share (adjusted for stock splits). Some growth stocks have very high P/E ratios because investors believe more in the long term potential of the company than they care about the current earnings.
P/E to G Ratio (PEG) – P/E ratio divided by a projected growth rate. This ratio is an attempt to improve upon the PE ratio by adjusting for expected growth. Although they are a better indicator of valuation than the simple P/E ratio, PEG ratios tend to be highest for very high and very low growth stocks. The ratio misses the effects of interest rates, duration of the growth rate, and the fact that the underlying relationship is non-linear.
Price/Sales Ratio (PSR) – the stock price per share divided by the sales per share. It can be used to compare companies when other measures (e.g. the P/E ratio) are not available or meaningful. However, there are two serious limitations to the ratio. First, the sales of the companies being compared should be relatively similar. A distribution company, which might normally have very thin margins, such as 1% of sales, will have a much lower PSR than a manufacturing company, which might normally have a 10% margin.
Primary Market – refers to transactions in which newly issued securities are sold to the “primary” buyers. All subsequent trading of those securities is done in the secondary market.
Prime Rate – the lowest borrowing interest rate available to anyone (the interest rate chartered banks charge their most credit-worthy borrowers). Quoted in the press, this benchmark rate serves as a starting point for many other interest rates.
Principal – 1) the original amount invested in a security; 2) the owner of a company.
Private Placement – sale of securities under an exemption from the rules governing sale of securities to the public.
Producer Price Index (PPI) – a measurement of prices of goods at the wholesale level. There are three broad subcategories within the PPI: crude, intermediate, and finished. The market tracks the finished goods index most closely, as it represents prices for goods that are ready for sale to the end user. At all stages of production, the market places more emphasis on the index excluding food and energy, referred to as the “core rate”. Food and energy prices tend to be quite volatile and obscure trends in the underlying inflation rate. Though the market reaction is determined by month/month changes in the PPI, year/year changes are also noted by analysts.
Profit Margin – an indicator of a company’s profitability. Determined by dividing net income by revenue for the same 12-month period. The result is shown as a percentage.
Profit Taking – widespread selling of a stock or of securities in general following an extended rise in value.
Program Trading – trades based on signals from computer programs. These are usually entered directly from the trader’s computer to the market’s computer system and executed automatically. Program trading accounts for an increasingly larger and larger portion of all trades throughout the day.
Prospectus – formal written document to sell securities that describes the plan for a proposed business enterprise, or the facts concerning an existing one, that an investor needs to make an informed decision. The document must explain the terms, the planned use of the money, historical financial statements, and other information that could help an investor decide whether the investment is appropriate.
Prospectus, Preliminary – the preliminary prospectus, also called a red herring, has blanks in it for details such as the final price of the securities. After the price is finalized, the final prospectus document is filed with the SEC, and copies are printed and distributed to all the investors.
Proxy – a document intended to provide shareholders with information necessary to vote in an informed manner on matters to be brought up at a stockholders’ meeting.
Put – an option contract that gives the holder of the option the right to sell, and places upon the writer the obligation to purchase the underlying security at the given strike price on or before the expiration date of the contract.
Put/Call Ratio – the ratio of put trading volume divided by the call trading volume. Moving averages can be used to smooth this chart out.