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Pacific Rim

Describes Asian countries that border the Pacific Ocean excluding Japan. The countries include: Hong Kong, South Korea, Singapore, Taiwan, China, Malaysia, Indonesia, the Philippines, New Zealand, and Australia.

Par

The face value of a bond is referred to as par value. The typical par value of a bond is $1,000. Par is the amount that is paid by the bond issuer at maturity.

Passive Investing

Investing in a strategy that's designed to match the performance of the market (index fund), but not beat the performance of the market (active management). Passive investors don't believe money managers can beat the market over longer time periods so they are not willing to pay higher fees or be exposed to the higher risk associated with active management.

Payment Date

Date on which a stock dividend or a bond interest payment is scheduled to be paid.

Penalty Clause

A financial penalty that is assessed when investors want to sell an asset or terminate a contract prematurely. Penalty clauses are designed to discourage investors from selling investments so the product company has a longer time period to earn revenue. Clauses are typically found in the agreements of back-end loaded mutual funds.

Performance Stock

A stock with high growth rates for revenue and profit that an investor feels will have a significant rise in value. Also known as a growth stock.

Portfolio

Several stocks that are held in a common account at a broker/dealer or bank.

Portfolio Beta

Used to measure the relative volatility of a portfolio. The market has a beta of 1. Portolios with betas of more than one are considered to be more volatile than the market. Portfolios with betas of less than one are considered to be less volatile than the market. Beta has no predictive value so it should be used to compare the volatility of funds to each other.

Portfolio Manager

A professional who is responsible for making portfolio management decisions. For example, asset allocation, security selection, and buys/sells.

Positive Sloped Yield Curve

Also considered a normal yield curve when longer-term bonds have higher interests rates than shorter-term bonds. This is the opposite of an inverted yield curve.

Precious Metals

Rarer metals that trade on the commodities exchanges: gold silver, platinum, etc. Some mutual funds also invest in precious metals.

Premium Price

When bonds sell for more than their par values, they are premium priced. Premium also applies to the price issuers pay to redeem their bonds.

Present Value

The current value of a future payment that is discounted for time.

Pre-Tax Earnings

Net Income before taxes.

Price/Earnings Ratio (P/E)

The price of a stock divided by earnings per share.

Price-Weighted Index

An index that gives higher priced stocks greater percentage impact on performance calculations.

Prime Rate

Base rate that banks use in pricing loans for their most creditworthy customers.

Principal

The face amount of a fixed income security. Or, the balance on a loan amount.

Private Placements

Investments that are sold direct to investors and not through exchanges.

Privatization

The process of converting a publicly owned company into a privately owned company.

Proceeds

Money that's received from the sale of an asset. Net proceeds would be proceeds after all expenses and commissions are deducted.

Profit Center

A business that could be part of a larger company that is responsible for producing its own profits. Profit centers frequently fund the growth of other divisions within companies.

Program Trading

Computer programs that execute large buy and sell transactions to capture small pricing discrepancies.

Promissory Note

A contract that commits the borrower of funds to repay the lender a specified amount of money by a particular date.

Prudent-Man Rule

A standard of care that has been adopted by pension plans and trusts. For example, when making investment decisions, decision-makers must do what a prudent people would do given the same information. For example, trustees of retirement plans are expected to act with prudence when they select Fiduciary Advisors.

Publicly Held

Companies with shares that are traded on exchanges and held by public investors.

Purchasing Power

The amounts of goods and services that can be purchased with a specific amount of money. Inflation increases the costs of goods and services and reduces purchasing power.