Moneyterms: P-R

Pair trade
Long and short positions in (classically two) different securities that have strongly correlated price movements.…
Parent company
A company that owns subsidiaries is the parent company of the latter.…
Pareto optimal
A Pareto optimal, or Pareto efficient, outcome is one such that no-one could be made better off without making someone else worse off.…
Pari passau
Securities are rank pari passau if they have equal entitlements to a payment or other benefit.…
Par value
The nominal value of a share in terms of share capital as shown on the balance sheet.…
Passive investing
A strategy that avoids stock-picking. Usually synonymous with index tracking.…
Patent Troll
A derogatory term for a patent holder who exploits the patent system is ways that are seen as unfair, inethical or harmful to society.…
Payback period
The time taken to recover the initial investment. A seriously flawed method of evaluating investments.…
Payout ratio
dividends ÷ post tax profits, or dividend per share ÷ EPS.…
PEG
PE ratio divided percentage annual growth in earnings per share.…
Penny shares
A term often used by share tipping publications. Shares that have a low absolute price. Low prices are not unnecessarily an indication of good value.…
PE ratio
Share price divided by earnings per share.…
Perpetuity
A stream of regular payments that will never terminate.…
PIBS (permanent interest bearing shares)
Securities issued by building societies that pay fixed interest. Often not redeemable.…
Piotroski's F-score
A measurement of the financial strength of companies, combining several other measures.…
Placing
The issue of new shares which are sold directly to new shareholders.…
PLF (passenger load factor)
Passenger-kilometres flown by an airline as a percentage of seat-kilometres available.…
Plus Market
An exchange specialising in smaller companies; formerly known as Ofex.…
Poison pill
An attempt to discourage an acquisition by making it more expensive or by reducing the value of the acquired business.…
Ponzi scheme
An investment scam that appears to be actually paying high returns by paying the supposed returns out of the investors' own capital.…
Portable alpha
Portable alpha is a process that allwos the addition of one portfolio’s alpha to another, without affecting the second portfolio’s beta.…
Portfolio investment
Investment by investors who are not interested in taking an active part in the management of a company.…
Portfolio mandate
The parameters within which a portfolio is managed.…
Portfolio theory
The theory concerning the value and riskiness of portfolios as opposed to individual securities.…
Positive basis trade
Selling both a CDS with a higher spread than yield spread on the bond it hedges…
Positive carry
A profitable difference between the income an investment generates and the cost of financing it.…
Possible oil reserves
Oil reserves that have a significant probability of being commercially exploitable, but which can not be said to be probable.…
Post balance sheet events
Events that occur after the balance the date to which accounts are prepared, but which have a material impact that must be disclosed in the accounts.…
Post-modern portfolio theory
A generalisation of modern portfolio theory based on different measures of risk.…
POTS
Plain Old Telecom Services; a synonym for old style switched telecoms.…
PPP (purchasing power parity)
An adjustment for the cost of goods and services, most often used when comparing GDP and similar countries across countries.…
Pre-emption rights
The rights of shareholders to be offered new issues of share before they are offered to non-shareholders.…
Pre-exceptional
A description of a number given before exceptional items; adjusted by adding back exceptional costs and subtracting exceptional profits.…
Preference shares
Shares that pay fixed dividends: payment of both dividends and capital takes priority over that of ordinary shares.…
Premium earned
The amount of premiums earned by the risk covered by an insurance company during a financial period.…
Premium income
The revenues an insurance company receives as premiums paid by customers.…
Premium written
The amount of premiums customers are required to pay for insurance policies written during the year.…
Prepayments
Any amounts that have been paid for goods and services not received by the end of an accounting period. Shown as a current asset in accounts.…
Prescription drug
A drug that may only be sold by a pharmacist when authorised by a written prescription from a medical practitioner.…
Present value
The value of a stream of cashflows adjusted for risk and for the time value of money.…
Present value of new business premiums
value of single premiums + discounted value of regular premium streams.…
Price/book value
Share price ÷ net assets per share.…
Price/cashflow
Share price ÷ (cash flow ÷ no of shares in issue).…
Price elasticity
The proportionate change in sales of a product that will be bought as a result of a unit change in price.…
Price/sales
(sales ÷ no of shares in issue) ÷ share price.…
Price sensitive
Information which is likely to have an effect on the price of a security when disclosed.…
Primary market
The sale of securities by issuers to investors.…
Prime cost
The sum of all types of direct cost.…
Principal
1) The amount of a loan (or bond) excluding interest, 2) An entity for whom an agent acts.…
Printing money
The creation of money by central banks, usually with the implication that it is at higher than normally prudent levels.…
Private client broking
Broking services offered to private individuals. These do to offer the access to research typically offered with the services offered to institutional clients.…
Private equity
Investment is unlisted companies, including the takeover and de-listing of listed companies.…
Probable oil reserves
Unproven oil reserves which have a better than 50% chance of being technically and commercially producible.…
Product Differentiation
Making a product or service look different in the eyes of consumers.…
Profit and loss account
A financial statement that shows the profit or loss a company has made over a period of time.…
Profit margin
Profit divided by sales. One of several measures that differ in the definition of profit used.…
Profit warning
An announcement that profits will be significantly less than current market expectations.…
Pro-forma
Accounts drawn up as though acquisitions and disposals that took place during a period, had taken place at the start of it.…
Project finance
The provision of debt finance for a particular project, to be repaid with the cash flows of that project with no, or limited, recourse to the borrower's other assets.…
Proportionate
Numbers that include each subsidiaries’ and associates’ numbers in proportion to the group shareholding in them. Often used by mobile telecoms companies.…
Proprietary trading
Trading in investments a bank does with its own money putting its own capital at risk.…
Prospective PE
Share price ÷ forecast EPS for the current financial year.…
Prospectus
A document containing financial and other information prior to certain capital raising exercises such as IPOs.…
Proven oil reserves
Oil reserves are those that are known to exist and be exploitable to a high degree of certainty.…
Provisions
A liability which may occur in the future. Shown in the profit and loss when created, thereafter in the balance sheet until reversed.…
PSTN
Public Switched Telecom Network; old style switched voice telecoms.…
Psychographics
Market segmentation by lifestyle; classifying people wants, aspirations and values.…
Purchase method
Requires that the buyer must be identified, and therefore goodwill created, in accounting for mergers and acquisitions.…
Pure play
A share that gives investors exposure only to a particular industry or product market.…
Put-call parity
A relationship between the price of European call and put options on the same underlying, the underlying security, and the risk free rate.…
Put option
An option that gives its holder the right to sell the underlying security at a pre-determined price.…
PVNBP
value of single premiums + discounted value of regular premium streams.…
Pyramid scheme
An investment scam that relies on paying the promoter and early participants out of entry fees paid by later participants.…
P & L
A financial statement that shows the profit or loss a company has made over a period of time.…
Q-theory
The theory that over or undervaluation can be measured by market value of assets ÷ replacement value.…
Qualified audit opinion
An auditors opinion stated on the accounts of a limitation in scope of the audit, or of disagreement with accounting treatment or disclosure.…
Quality of earnings
The extent to which earnings are stable, predictable, and reflect the company's underlying performance.…
Quantitative analyst
A specialist in the mathematical techniques of finance. Often called "quant" or "rocket scientists".…
Quantitative easing
A euphemism for printing money.…
Quantitative finance
The application of sophisticated maths to finance.…
Quick assets ratio
(current assets - stocks) ÷ current liabilities. A measure of a company's ability to pay short term debt.…
Quoted company
A company whose securities are publicly traded on an exchange.…
Quote driven trading system
A trading system that operates by matching orders against market maker's quotes rather than against other orders.…
RAJAR
An organisation that compiles audience share, market share and reach statistics for all British radio broadcasters.…
Random walk
Price changes in securities that are (a priori) purely random. Expected behaviour in efficient markets.…
Rating
The price of a security compared to its recent fundamentals.…
Raw materials
Raw materials are the part of stocks that have been purchased for further processing but on which no work has yet been done.…
Razor-blade model
A razor-blade model is a business model based on selling a product at a loss in order to profit from the sale of consumables necessary for its use.…
Reach
The number of people who use a broadcast medium (such as a radio or TV station) over a given period of time.…
Real estate investment trust
A collective investment scheme that allows tax efficient investment in property.…
Real interest rates
Interest rates adjusted for inflation: (1+r)/(1 + i) - 1 where r is the nominal interest rates and i is inflation.…
Realised volatility
The actual standard deviation of prices over a period, as opposed to implied volatility and other numbers that are calculated using financial models.…
Real option
The option value created by the freedom to act in the future of a choice now.…
Real return
The return on an investment, less the reduction in its value as a result of inflation.…
Real terms
The change in a financial number after correcting for the effect of inflation.…
Real time
System that respond, or data that is supplied, as events happen.…
Receivership
The running of a company, or management of particular assets, is handed over to a receiver appointed by creditors in order to recover debts.…
Recession
A sustained but short term decline in the size of the economy.…
Record date
The date as at which a list of holders of a security is compiled in order to process a corporate action.…
Recovery
The amount of metal or oil extracted, as a proportion of what was available in the ore or the well.…
Red chip
Mainland Chinese companies listed and registered in Hong Kong.…
Redeemable
A security is redeemable is the issuer has a right to re-pay the liability it represents and cancel it.…
Redeemable bonds
A bond that the the issuer can re-pay before maturity.…
Redeemable preference shares
Preferences shares that can be repaid in full, making them even more bond-like than other prefs.…
Redemption yield
The IRR a buyer would receive by purchasing a bond at the current market price.…
Reducing balance
A method of depreciation, often used for tax purposes, that weights the charge to profits towards the early years.…
Reduction of capital
A reduction of shareholders capital or other non-distributable reserves.…
Re-equitisation
The opposite of de-equitisation, the subsitution of equity for debt.…
Registered securities
Securities whose is recorded in a register.…
Registrar
A specialist in maintaining registers recording ownership of securities.…
Regulatory arbitrage
Financial engineering designed to evade regulation.…
Regulatory Capture
The dominance of regulators by those they regulate rather than the public good they ostensibly serve.…
Reinsurance
Insurance for insurers. They pass on to reinsurers risks that they cannot absorb themselves.…
Reinsurance retention ratio
net premium written ÷ gross premium written.…
REIT
A collective investment scheme that allows tax efficient investment in property.…
Relative PE
A company's PE ratio divided by the sector PE or the market PE.…
Relative returns
The return on an investment less the market return.…
Replacement cost profit
A profit figure that is calculated using the cost of supplies at the cost of replacing supplies at current prices.…
Replacement cycle
The time between purchase and replacement of a capital asset.…
Repo
The sale of securities (usually government debt) tied to an agreement to buy the securities back later.…
Repo rate
The price gain between the two trades in a repo transaction, expressed as an annualised percentage.…
Required return on capital
The return required to compensate providers of capital for risk and the time value of money.…
Re-rating
A sharp change in a company’s valuation which reflects a significant change in the markets view of the company.…
Research and development
Expenditure on researching and developing new products. Development costs are related to specific products and may be capitalised.…
Reserve replacement ratio
The ratio of additions to oil reserves to the amount extracted.…
Reserve requirement
A proportion of deposits that banks are not allowed to lend.…
Residual income model
A DCF valuation model: and dividend discount model adjusted for future capital raising.…
Residual value
The value of the asset at the end of its useful life (for the purpose of depreciation), or at the end of a lease.…
Resource curse
The damaging effects of inflows money into a country as a result of exports of natural resources, and similar sources, also know as Dutch disease.…
Retail format
The overall appearance and feel that a retailer presents to customers including its looks, layout, and the sort of range it stocks.…
Retained profit
Retained profit, or retained earnings is the amount of profit kept by the company rather than paid as dividends.…
Return on average assets
Net profit ÷ average assets. An efficiency ratio relevant to banks.…
Return on capital employed
Return on capital employed. EBIT ÷(shareholders funds + debt).…
Return on invested capital
Profit as a proportion of the total capital invested in a business rather than assets shown in the balance sheet.…
Return on investment
The profit an investment generates as a proportion of the value of the assets used to generate it.…
Return on operating capital employed
A variant of ROCE. EBIT ÷(capital + reserves + provisions for liabilities - cash).…
Returns of capital
Large payments to shareholders that change the companies’ financial structure. They may be made in several different ways.…
Revaluation reserve
The non-dsitributable part of shareholders funds arising from increases in the value of assets.…
Revenue per available lower berth day
Revenue made by a cruise ship or fleet relative to available capacity; similar to hotel revpar.…
Revenue per available room
Revenue per available room. occupancy ×room rate.…
Revenue recognition
The choice of which inflows a company should consider to be part of its sales.…
Reverse convertibles
A bond that can be exchanged for shares at the option of the issuer.…
Reverse-repo
The purchase of a security tied to an agreement to sell back later.…
Reverse takeover
A takeover in which control of the combined business goes to the shareholders and management of the "acquired" business.…
Reversion to mean
The tendency of a number that changes over time to return to the long term average after anomalous periods.…
Revpar
Revenue per available room. occupancy ×room rate.…
Rho
The rate of change of the price of a portfolio or derivative with the interest rates.…
Rights issue
The sale of new shares, with existing shareholders having a transferable right to buy the new shares.…
Risk
The probability that the actual return on an investment may differ from the expected return.…
Risk arbitrage
Trading that aims to exploit market inefficiencies that occur during takeover bids.…
Risk aversion
The preference of investors for the less risky of investments with identical expected returns.…
Risk free rate
The rate of return that can be obtained with certainty; the yield on government bonds.…
Risk premium
The difference between the rate of return on a security (or a market or an investment) and the risk free rate of return.…
Risk weighted assets
The total assets a bank has, with the value of each asset adjusted by a factor that reflects its riskiness. Used to calculate capital adequacy ratios.…
RNS
A news service run by the London Stock Exchange which carries all announcements made to the market by London listed companies.…
ROCE
Return on capital employed. EBIT ÷(shareholders funds + debt).…
RoE
Return on equity. profit ÷equity.…
RoI
The profit an investment generates as a proportion of the value of the assets used to generate it. EBIT ÷value of assets.…
ROIC
Return on invested capital. Profit as a proportion of the total capital invested in a business rather than assets shown in the balance sheet.…
RPK (Revenue Passenger Kilometres)
A volume measure for an airline; each kilometre each a paying passenger is carried.…
R & D
Expenditure on researching and developing new products. Development costs are related to specific products and may be capitalised.…