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.…