Super Finance Glossary
Over 10,000 financial glossary terms...
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Browsing by the letter "P"
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Preferred Dividend Coverage
Definition: Net income after interest and taxes (before common stock dividends) divided by preferred stock dividends.
Definition: Net income after interest and taxes (before common stock dividends) divided by preferred stock dividends.
Preferred Equity Redemption Stock (PERC)
Definition: Preferred stock that converts automatically into equity at a stated date. A limit is placed on the value of the shares the investor receives.
Definition: Preferred stock that converts automatically into equity at a stated date. A limit is placed on the value of the shares the investor receives.
Preferred Habitat Theory
Definition: A biased expectations theory that believes the term structure reflects the expectation of the future path of interest rates as well as risk premium. The theory rejects the assertion that the risk premium must rise uniformly with maturity, but instead profits that to the extent that the demand for and supply of funds do not match for a given maturity range, some participants will shift to maturities showing the opposite imbalances, as long as they are compensated by an appropriate risk premium whose magnitude will reflect the extent of aversion to either price or reinvestment risk.
Definition: A biased expectations theory that believes the term structure reflects the expectation of the future path of interest rates as well as risk premium. The theory rejects the assertion that the risk premium must rise uniformly with maturity, but instead profits that to the extent that the demand for and supply of funds do not match for a given maturity range, some participants will shift to maturities showing the opposite imbalances, as long as they are compensated by an appropriate risk premium whose magnitude will reflect the extent of aversion to either price or reinvestment risk.
Preferred Shares
Definition: Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock.
Definition: Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock.
Preferred Stock
Definition: 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 that is paid prior to the common stock dividend, stated in a dollar amount or as a percentage of par value. This stock does not usually carry voting rights. Preferred stock has characteristics of both common stock and debt.
Definition: 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 that is paid prior to the common stock dividend, stated in a dollar amount or as a percentage of par value. This stock does not usually carry voting rights. Preferred stock has characteristics of both common stock and debt.
Preferred Stock Ratio
Definition: Preferred stock at par value divided by total capitalization, which gives the portion of capitalization that consists of preferred stock.
Definition: Preferred stock at par value divided by total capitalization, which gives the portion of capitalization that consists of preferred stock.
PREG
Definition: Financial ratio defined as stock price divided by sales over earnings growth. Often used in the valuation of Internet stocks. Related: PSSG.
Definition: Financial ratio defined as stock price divided by sales over earnings growth. Often used in the valuation of Internet stocks. Related: PSSG.
Preliminary Estimate
Definition: The second estimate of GDP released about two months after the measurement period.
Definition: The second estimate of GDP released about two months after the measurement period.
Premature Distribution
Definition: A distribution from an IRA before the owner reaches age 59-1/2. Generally, a 10% penalty tax is owed on such a distribution. Also known as an early distribution or an early withdrawal.
Definition: A distribution from an IRA before the owner reaches age 59-1/2. Generally, a 10% penalty tax is owed on such a distribution. Also known as an early distribution or an early withdrawal.
Premium
Definition: (1) A bond sold above its par value. (2) The price of an option contract; also, in futures trading, the amount by which the futures price exceeds the price of the spot commodity. (3) For convertibles, amount by which the price of a convertible exceeds parity, and is usually expressed as a percentage. Suppose a stock is trading at $45, and the bond is convertible at a $50 stock price and the convertible bond trading at 105. A similar bond without the conversion feature trades at $90. In this case, the premium is $15, or 16.66%=(105-90)/90. If the premium is high, the bond trades like any fixed income bond; if low, like a stock. See: Gross parity, net parity. (4) For futures, excess of fair value of future over the spot index, which in theory will equal the Treasury bill yield for the period to expiration minus the expected dividend yield until the future's expiration. (5) For options, price of an option in the open market (sometimes refers to the portion of the price that exceeds parity). (6) For straight equity, price higher than that of the last sale or inside market. Related: Inverted market premium payback period. Also called break-even time; the time it takes to recover the premium per share of a convertible security.
Definition: (1) A bond sold above its par value. (2) The price of an option contract; also, in futures trading, the amount by which the futures price exceeds the price of the spot commodity. (3) For convertibles, amount by which the price of a convertible exceeds parity, and is usually expressed as a percentage. Suppose a stock is trading at $45, and the bond is convertible at a $50 stock price and the convertible bond trading at 105. A similar bond without the conversion feature trades at $90. In this case, the premium is $15, or 16.66%=(105-90)/90. If the premium is high, the bond trades like any fixed income bond; if low, like a stock. See: Gross parity, net parity. (4) For futures, excess of fair value of future over the spot index, which in theory will equal the Treasury bill yield for the period to expiration minus the expected dividend yield until the future's expiration. (5) For options, price of an option in the open market (sometimes refers to the portion of the price that exceeds parity). (6) For straight equity, price higher than that of the last sale or inside market. Related: Inverted market premium payback period. Also called break-even time; the time it takes to recover the premium per share of a convertible security.
Premium Raid
Definition: An attempt to acquire a large portion of a company's stock to gain control by offering stockholders a premium over the market value for their shares.
Definition: An attempt to acquire a large portion of a company's stock to gain control by offering stockholders a premium over the market value for their shares.
Prepackaged Bankruptcy
Definition: A bankruptcy in which a debtor and its creditors pre-negotiate a plan of reorganization and then file it along with the bankruptcy petition.
Definition: A bankruptcy in which a debtor and its creditors pre-negotiate a plan of reorganization and then file it along with the bankruptcy petition.
Prepaid Interest
Definition: An asset account showing interest that has been paid in advance, which is expensed and charged to the borrower's P & L statement.
Definition: An asset account showing interest that has been paid in advance, which is expensed and charged to the borrower's P & L statement.
Prepayment Penalty
Definition: A fee a borrower pays a lender when the borrower repays a loan before its scheduled time of maturity.
Definition: A fee a borrower pays a lender when the borrower repays a loan before its scheduled time of maturity.
Prepayment Penalty Clause
Definition: A clause in a mortgage that requires the borrower to pay a fee for retiring a loan before it becomes due.
Definition: A clause in a mortgage that requires the borrower to pay a fee for retiring a loan before it becomes due.
Prepayment Speed
Definition: Also called speed, the estimated rate at which mortgagors pay off their loans ahead of schedule, critical in assessing the value of mortgage pass-through securities.
Definition: Also called speed, the estimated rate at which mortgagors pay off their loans ahead of schedule, critical in assessing the value of mortgage pass-through securities.
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