P/E (Price/Earnings Ratio)
Shows a share's market price in proportion to its earnings. Calculated by dividing the share price by the reported or forecast annual earnings per share. For an investor this means that, if the P?E ratio is 10, the price is equivalent to ten years earnings. The figure illustrates expectations of future company growth. In comparisons, it is best used for companies operating in the same field. For a portfolio, the ratio is the weighted average P/E, the greater the expectations for a company's future growth in earnings.
Par Value
The face value or the price of a share, debenture, or bond that is written on the certificate. It is not the market price.
Pay In
The designated day on which the members pay securities and fund to the clearing house.
Pay Out
The designated day on which the Clearing House effects payment and deliveries to the members
Payout Ratio
Percentage of earnings paid out in dividends.
Penny Stocks
This term is typical to the USA stock markets. Low-priced issues, often highly speculative, selling at less than $1 a share. Frequently used as a term of disparagement although some penny stocks have developed into investment-caliber issues. In India they are called low-Capped stocks and BSE has a separate index for them. It is not unusual, When a bull market is raging, to find the index for these stocks outpacing the Sensex. These stocks offer larger returns but at higher risk.
Pledge
To deposit securities with a lender as security for money borrowed.
Poison Pill
Steps taken by a corporation to thwart a hostile takeover attempt. For instance, a company could issue rights to purchase shares at a substantial discount after a merger, or it might issue preferred shares giving holders the right to redeem their shares at a discount after a merger.
Portfolio
A collection of stocks, mutual funds or other securities that is owned by an investor.
Post-Offering Shares
The number of shares that will be outstanding after an IPO.
Power of Attorney
Legal document which gives someone the right to act on your behalf in legal matters.
Preferred Stock
Debt instruments. Preferred shareholders are paid a head of common stock holders in the event the corporation is liquidated. Convertible preferred shares can be converted into common stock according to predetermined conditions. Mostly these types of stocks pay a fixed dividend regardless of corporate earnings and have priority over common stock in the payment of dividends. However, it carries no voting rights, and should earnings rise significantly the preferred holder is stuck with the same fixed dividend while common holders collect more. The fixed income stream of preferred stock makes it similar in may ways to bonds. It is like a fixed deposit in a bank. You are stuck with a fixed return regardless of how high interest rates climb. On the other hand, If interest rates fall, you can congratulate yourself on a wise decision.
Premium
For bonds and preferred stock, the premium is the amount by which the price exceeds the face, or par value. For options markets, the premium is synonymous with the options price. In other words, you have to pay a little extra upfront if you want to be shielded from the fluctuations of enquiry stock.
Price Band
It sets up the upper and lower limits for share's movement on any given day. It is based on the previous days trading closing price. The system will not accept the order that are outside the set limits. A measure to check price volatility.
Price Rigging
A process where persons collude to artificially increase or decrease the price of a security. It is very difficult to judge initially whether a rise or fall in the price of a security is due to genuine activity or price rigging.
Price Earnings Growth (PEG) Ratio
Commonly used for growth stocks, the PEG ratio takes into consideration growth by dividing the P/E ratio by current annual growth or forward annual growth or forward annual growth estimates.
Private Placement
The sale of securities to a small group of investors that is exempt from the elaborate requirements of a public issue. Private placements are usually made to investment banks and financial lending institutions from whom the issuing company takes or intends to take, a loan. The private placement results in the lending institute holding the company's stock collateral.
Profit Margin
Bottom line (after tax) earnings divided by sales.
Programmed Trading
Investment strategy that uses computers programmed to buy or sell large numbers of securities to take advantage of price discrepancies stock index futures or options and the actual stocks represented in those averages (see Arbitrage).Not fully established in India . This probably the nearest you can get to a computer actually trading on the exchange with the cheapest buy and sell to the alternative with the highest price - which, after all, is the objective of any business.
Prospectus
A document circulated to potential investors prior to an IPO describing a company's business plan.
Proxy Statement
Material given to stockholders when the corporation solicits shareholder votes. In effect, the company seeks temporary delegation of your voting rights. The proxy statement usually contains details on the corporation's executive compensations plans.
Publicly Held Corporation
A corporation that allows anyone in the public to purchase its stock.
Put Option
An option where the buyer gets the right to sell the underlying security at a specified future date at a specified price.
Pyramiding
So called because it is akin to building a pyramid. It involves pledging shares with a banker or broker to raise a loan to buy more shares of the same company, pushing up their prices. These shares are pledged again to secure a further loan to buy additional shares of the same company in a self-feeding cycle which is called pyramiding. In a bullish market this causes the price to rise further and increase the operator's profit. In a bear market this causes margin calls and substantial losses. it can, more appropriately, be called building a house of cards. The whiff of a market rumors and pyramid could collapse around you. |
