Glossary
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 Premium to NAV
 Unlike regular openend mutual funds, which are bought and sold directly from the fund company at the net asset value (NAV) of their portfolio securities, ETFs and closedend funds trade at prices determined by the market forces of supply and demand. A fund that trades at a price higher than its NAV is said to trade at a premium to its NAV.
 Prepayment Risk
 The possibility that, as interest rates fall, homeowners will refinance their home mortgages, resulting in the prepayment of GNMA securities, and possible decline in net asset values of GNMA Funds.
 Price
 Price of a share of common stock on the date shown. Highs and lows are based on the highest and lowest intraday trading price.
 Price compression
 The limitation of the price appreciation potential for a callable bond in a declining interest rate environment, based on the expectation that the bond will be redeemed at the call price.
 Price discovery process
 The process of determining the prices of the assets in the marketplace through the interactions of buyers and sellers.
 Price momentum
 Related: Relative strength
 Price persistence
 Related: Relative strength
 Price risk
 The risk that the value of a security (or a portfolio) will decline in the future.
 Price spread
 The difference between the "bid" and "ask" price on a stock or ETF.
 Price value of a basis point (PVBP)
 Also called the dollar value of an 01, a measure of the change in the price of the bond if the required yield changes by one basis point.
 Pricevolume relationship
 A relationship espoused by some technical analysts that signals continuing rises and falls in security prices based on accompanying changes in volume traded.
 Price/Book (P/B) ratio
 The price/book (P/B) ratio of a fund is the weighted average of the price/book ratios of all the stocks in a fund's portfolio. Book value is the total assets of a company, less total liabilities (sometimes referred to as carrying value). A company's book value is calculated by dividing the market price of its outstanding stock by the company's book value, and then adjusting for the number of shares outstanding. (Stocks with negative book values are excluded from this calculation.) In computing a fund's average P/B, Lipper weights each portfolio holding by the percentage of equity assets it represents, so that larger positions have proportionately greater influence on the final P/B.
 Price/Earning (P/E) ratio
 The price/earnings (P/E) ratio of a fund is the weighted average of the price/earnings ratios of the stocks in a fund's portfolio.The P/E ratio of a company, which is a comparison of the cost of the company's stock and its trailing 12month earnings per share, is calculatedby dividing these two figures. In computing the average, Lipper weights each portfolio holding by the percentage of equity assets it represents,so that larger positions have proportionately greater influence on the fund's final P/E. A high P/E usually indicates that the market will paymore to obtain the company's earnings because it believes in the firm's ability to increase its earnings. (P/Es can also be artificially inflatedif a company has very weak trailing earnings, and thus a very small number in this equation's denominator.) A low P/E indicates the market hasless confidence that the company's earnings will increase; however, a fund manager or an individual with a 'value investing' approach may believesuch stocks have an overlooked or undervalued potential for appreciation.
 Pricing efficiency
 Also called external efficiency, a market characteristic where prices at all times fully reflect all available information that is relevant to the valuation of securities.
 Primary market
 The principal underlying market for a financial instrument or physical commodity.
 Principal
 The basic amount actually invested, exclusive of earnings.
 Private Company
 A company that issues private stock and is not publicly traded.
 Probability of Profit
 Probability of Profit is the probability that the predicted stock price falls within the option trade's profit zones. The predicted stock price distribution is computed by projecting the stock price randomly into the future using the SV. The prediction stops at the expiration of the earlist expiring option leg.
 Professional Management
 The pool of shareholder dollars invested in a fund is managed by fulltime, experienced professionals who decide which securities to hold, when to buy, and when to sell.
 Profit margin
 The ratio of earnings available to stockholders to net sales.
