P-Test

Statistical test for significance, used in financial modeling or hypothesis testing.

P-Value

Probability of observing results by chance, used in financial data analysis.

Pac-Man Defense

Takeover defense where the target firm tries to acquire the bidder.

Paga

A Nigerian mobile payment platform, facilitating financial transactions.

Paid-In Capital

Capital contributed by shareholders, recorded on the balance sheet.

Paid-Up Additional Insurance

Extra life insurance bought with dividends, increasing policy value.

Paid-Up Capital

Total capital shareholders have paid for issued shares.

Painting the Tape

Illegal trading to create false activity, inflating stock prices.

Paper Money

Currency notes issued by governments, like USD or EUR.

Paper Trade

Simulated trading without real money, used for practice or testing.

Par

The face value of a bond or stock, typically $1,000 for bonds.

Par Value

The nominal value of a security, set by the issuer.

Par Yield Curve

Yields of bonds trading at par, used as a benchmark.

Parabolic SAR (Stop and Reverse) Indicator

Technical indicator for trend direction and stop-loss points.

Paradox of Thrift

Increased saving reducing economic activity, per Keynesian theory.

Parent Company

A firm owning a controlling stake in a subsidiary.

Pareto Analysis

Identifying key factors (80/20 rule) for financial or operational focus.

Pareto Efficiency

Resource allocation where no one can be better off without harming another.

Pareto Improvement

A change benefiting at least one party without harming others.

Pareto Principle

80% of outcomes from 20% of causes, used in financial analysis.

Pari-passu

Equal ranking of securities or debts in priority or repayment.

Parity

Equal value, like bond price matching par or currency exchange rates.

Parity Price

The price equating two assets or markets, like convertible bonds.

Parsonage Allowance

Tax-exempt housing allowance for clergy, reducing taxable income.

Participating Policy

Insurance policy paying dividends to policyholders, like mutual insurers.

Participating Preferred Stock

Preferred shares with dividends plus potential extra payouts.

Participation Rate

Percentage of an asset’s gains an investment, like an annuity, captures.

Participatory Note

Derivative allowing foreign investors to trade in restricted markets, like India.

Partnership

A business owned by two or more people, sharing profits and liabilities.

Passive Activity Loss Rules

IRS rules limiting deductions for losses from passive investments.

Passive Foreign Investment Company (PFIC)

Foreign firms with passive income, subject to complex U.S. tax rules.

Passive Income

Earnings from investments or rentals, requiring minimal effort, like dividends.

Passive Investing

Long-term, low-cost investing tracking indices, like ETFs.

Past Due on a Loan

Missed loan payment, risking fees, credit damage, or default.

Patent

Legal protection for inventions, impacting innovation and firm valuation.

PATH Act

2015 U.S. law extending tax credits and deductions, like for housing.

Path Dependency

Outcomes influenced by past events, like in economic or financial models.

Patriot Act

U.S. law enhancing financial surveillance to combat terrorism, affecting banking.

Pattern Day Trader

A trader executing four or more day trades in five days, per FINRA rules.

Pay Yourself First

Saving before spending, prioritizing financial goals like retirement.

Payable On Death (POD)

Account designation transferring funds to a beneficiary upon death.

Payback Period

Time to recover an investment’s cost, used in project evaluation.

Payday Loan

Short-term, high-interest loan tied to a borrower’s paycheck, often predatory.

Payee

The recipient of a payment, like in checks or transfers.

Payment

Transfer of money for goods, services, or debt repayment.

Payment-in-Kind (PIK)

Non-cash payment, like additional securities, often in high-yield debt.

Payout

Distribution of earnings, like dividends or insurance claims, to stakeholders.

Payout Ratio

Dividends divided by net income, showing profit distribution to shareholders.

PayPal

A digital payment platform for online and mobile transactions.

Payroll

Employee compensation process, including wages and taxes, impacting costs.

Payroll Tax

Taxes on wages, like Social Security or Medicare, paid by employers/employees.

P/E 10 Ratio

Price-to-earnings ratio using 10-year average earnings, smoothing volatility.

Peer Group

Similar companies used for comparison in valuation or performance analysis.

Peer-to-Peer (P2P) Economy

Direct transactions between individuals, like crowdfunding or ridesharing.

Peer-to-Peer Lending

Direct loans between individuals via platforms, bypassing banks.

Pegging

Fixing a currency’s value to another, like USD, to stabilize exchange rates.

Pell Grant

U.S. need-based grant for low-income students, not repaid.

Penetration Pricing

Low initial pricing to gain market share, common in new products.

Pennant

A chart pattern signaling trend continuation, shaped like a small triangle.

Penny Stock

Low-priced, speculative stocks, typically under $5, traded OTC.

Pension Plan

Retirement plan funded by employers/employees, providing post-retirement income.

Per Capita

Per person, used in economic metrics like income or GDP.

Per Capita GDP

GDP divided by population, measuring economic output per person.

Per Stirpes

Inheritance divided equally among branches of heirs, ensuring fair distribution.

Perceived Value

Subjective worth of a product or investment, influencing pricing or demand.

Percentage Change

Relative change in a value, like stock price, over time.

Percentage of Completion Method

Revenue recognition based on project progress, used in long-term contracts.

Perfect Competition

A market with many buyers/sellers, identical products, and no barriers.

Performance Bonds

Guarantees ensuring contract completion, common in construction or finance.

Performance Budget

Budget based on outcomes or results, used in financial planning.

Performance Management

Aligning employee goals with business objectives, impacting financial success.

Periodic Interest Rate

Interest rate per period, like monthly, for loans or investments.

Permanent Income Hypothesis

Theory that spending is based on expected long-term income, not current income.

Permanent Life Insurance

Life insurance with lifelong coverage and cash value, like whole life.

Perpetual Bond

A bond with no maturity date, paying interest indefinitely.

Perpetual Inventory

Real-time inventory tracking, updating with each sale or purchase.

Perpetuity

An investment with infinite cash flows, valued using present value formulas.

Perseroan Terbatas (PT)

Indonesian term for a limited liability company, similar to an LLC.

Personal Consumption Expenditures (PCE)

U.S. measure of consumer spending, a key inflation and economic indicator.

Personal Finance

Managing individual or household money, like budgeting or investing.

Personal Financial Specialist (PFS)

A CPA credential for financial planning, advising on wealth management.

Personal Financial Statement

A document detailing an individual’s assets, liabilities, and net worth.

Personal Guarantee

A promise to repay a loan personally if the borrower defaults.

Personal Identification Number (PIN)

A secure code for accessing financial accounts or cards.

Personal Income

Total income received by individuals, including wages and investments.

Personal Lines Insurance

Insurance for individuals, like auto or home, not businesses.

Personal Property

Movable assets, like cars or jewelry, distinct from real estate.

Personal Service Corporation

A business taxed at a flat rate, often for professional services.

Personally Identifiable Information (PII)

Data like SSN or name, protected in financial transactions for privacy.

PEST Analysis

Framework assessing political, economic, social, and technological factors in business.

Peter Principle

Theory that employees are promoted to their level of incompetence.

Petrodollars

Revenue from oil exports, impacting global currency and trade flows.

Petroleum

Crude oil and derivatives, a major commodity influencing energy markets.

Petty Cash

Small cash fund for minor expenses, tracked for financial control.

Phantom Stock Plan

Employee compensation mimicking stock ownership without actual shares.

Philanthropy

Charitable giving, often impacting tax planning or corporate social responsibility.

Phillips Curve

Economic model linking unemployment and inflation, guiding monetary policy.

Physical Capital

Tangible assets, like machinery, used in production and valued in finance.

Pigovian Tax

Tax on activities with negative externalities, like pollution, to correct market failures.

PIIGS

Acronym for Portugal, Ireland, Italy, Greece, Spain, linked to Eurozone debt crises.

PIMCO (Pacific Investment Management Co.)

Global investment firm specializing in fixed income, like bonds.

Pink Sheets

OTC market for unlisted stocks, often penny stocks, with minimal regulation.

Piotroski Score

A 9-point system assessing a company’s financial health for value investing.

Pip

Smallest price movement in forex, typically 0.0001 for most currency pairs.

Pitchbook

A document presenting a business or investment opportunity to investors.

Pivot Point

A technical level used to predict support/resistance in trading.

Plain Vanilla

Simple, standard financial products, like basic bonds or options.

Planned Obsolescence

Designing products with a limited lifespan to drive future sales.

Platinum

A precious metal traded as a commodity or investment asset.

Platykurtic

A distribution with thinner tails than normal, indicating lower risk in finance.

Pledged Asset

Collateral securing a loan, like property for a mortgage.

Plowback Ratio

Earnings retained for reinvestment, calculated as 1 minus payout ratio.

Plunge Protection Team (PPT)

Informal term for U.S. government efforts to stabilize markets during crashes.

Point-and-Figure (P&F) Chart

Chart plotting price changes without time, focusing on trends.

Point of Purchase (POP)

Where a sale occurs, like a checkout, impacting financial transactions.

Point of Sale (POS)

System processing card payments at retail, critical for revenue tracking.

Poison Pill

Anti-takeover tactic diluting shares to make acquisition costly.

Poisson Distribution

Probability model for rare events, used in financial risk analysis.

Political Action Committee (Super PAC)

Group raising funds for political campaigns, impacting policy and markets.

Political Economy

Study of politics and economics interplay, like trade or tax policies.

Political Risk

Risk of losses from political changes, like nationalization or sanctions.

Ponzi Scheme

Fraudulent investment scheme paying returns from new investors’ funds.

Pooled Funds

Investments combining multiple investors’ money, like mutual funds.

Population Statistics

Demographic data, like age or income, used in economic and financial analysis.

Pork Barrel Politics

Government spending for local projects to gain political favor, affecting budgets.

Porter Diamond

Model analyzing national competitiveness based on industry factors.

Porter's 5 Forces

Framework assessing industry competition: rivalry, bargaining power, and threats.

Portfolio Investment

Investing in financial assets, like stocks or bonds, not direct control.

Portfolio Management

Managing investments to meet goals, balancing risk and return.

Portfolio Manager

Professional overseeing investment portfolios, like mutual or hedge funds.

Portfolio of Financial Assets

Collection of securities, like stocks or bonds, held for investment.

Portfolio Runoff

Natural reduction in portfolio assets, like maturing bonds or loans.

Portfolio Turnover

Rate of buying/selling in a portfolio, impacting costs and taxes.

Portfolio Variance

Measure of portfolio risk based on asset volatility and correlations.

Position Trader

Trader holding positions for weeks or months, focusing on long-term trends.

Positive Correlation

When two assets move in the same direction, like stocks in a sector.

Positive Economics

Objective economic analysis based on facts, not value judgments.

Positive Pay

Bank service matching issued checks to prevent fraud.

Post-Money Valuation

Company value after new investment, used in venture capital.

Post-Trade Processing

Steps after a trade, like clearing and settlement, ensuring completion.

Posterior Probability

Updated probability after new data, used in financial forecasting.

Poverty

Economic condition of insufficient income for basic needs, impacting policy.

Poverty Trap

Cycle where low income prevents wealth accumulation, perpetuating poverty.

Power Distance Index (PDI)

Measure of societal hierarchy acceptance, impacting financial management styles.

Power of Attorney

Legal document authorizing someone to act on another’s behalf in financial matters.

Pre-Foreclosure

Stage before foreclosure where a borrower is delinquent but can still sell.

Pre-IPO

Stage before a company goes public, often involving private funding.

Pre-Market

Trading before regular market hours, often with lower liquidity.

Predatory Pricing

Selling below cost to eliminate competitors, risking antitrust violations.

Preemptive Rights

Shareholders’ right to buy new shares to maintain ownership percentage.

Preference Shares

Shares with priority dividends or liquidation claims over common stock.

Preferred Dividend

Fixed dividends paid to preferred shareholders before common shareholders.

Preferred Provider Organizations (PPO)

Health plans with flexible provider choices, impacting employee benefit costs.

Preferred Stock

Equity with priority dividends and liquidation rights, less volatile than common.

Premium

Extra cost above par, like bond premiums, or insurance/option payments.

Premium Bond

A bond trading above par value due to high demand or low rates.

Prepaid Credit Card

A card loaded with funds upfront, limiting spending to the balance.

Prepaid Expense

Payments for future services, like rent, recorded as assets initially.

Prepayment

Paying a debt early, like a mortgage, potentially reducing interest.

Prepayment Penalty

Fee for paying off a loan early, protecting lender revenue.

Prepayment Risk

Risk of early loan repayment reducing expected interest, affecting MBS.

Present Value

Current worth of future cash flows, discounted by an interest rate.

Present Value Interest Factor (PVIF)

Discount factor for a single future cash flow at a given rate.

Present Value Interest Factor of Annuity (PVIFA)

Discount factor for a series of equal cash flows, used in annuities.

Present Value of an Annuity

Current value of regular future payments, discounted for time value.

Preservation of Capital

Investment strategy prioritizing safety over high returns, like bonds.

Press Conference

Public announcement, often impacting markets, like central bank statements.

Pretax Earnings

Income before taxes, used to assess profitability before tax impact.

Pretax Profit Margin

Pretax earnings divided by revenue, measuring pre-tax efficiency.

Price Action

Security price movements, analyzed for trading decisions without indicators.

Price Ceiling

Government-set maximum price, often causing shortages, like rent control.

Price Controls

Government regulations on prices, affecting supply and demand dynamics.

Price Discovery

Process of determining asset prices through market supply and demand.

Price Discrimination

Charging different prices for the same product, maximizing revenue.

Price/Earnings-to-Growth (PEG) Ratio

P/E divided by growth rate, assessing stock value relative to growth.

Price Elasticity of Demand

How price changes affect demand, guiding pricing strategies.

Price Fixing

Illegal agreement among firms to set prices, reducing competition.

Price Leadership

A firm setting industry prices, followed by competitors, like in oligopolies.

Price Level

Average price of goods/services, used in inflation or economic analysis.

Price Rate of Change Indicator (ROC)

Measures price momentum, signaling overbought or oversold conditions.

Price Sensitivity

How demand changes with price, critical for financial product pricing.

Price Skimming

Setting high initial prices, then lowering, to maximize early profits.

Price Stickiness

Prices resisting change despite market shifts, like wages in recessions.

Price-Taker

A firm or investor accepting market prices, common in perfect competition.

Price Target

Analyst’s predicted stock price, guiding investment decisions.

Price-to-Book Ratio (P/B Ratio)

Market price per share divided by book value, assessing valuation.

Price-to-Cash Flow Ratio

Stock price divided by cash flow per share, evaluating cash efficiency.

Price-to-Earnings Ratio (P/E Ratio)

Stock price divided by earnings per share, a key valuation metric.

Price to Free Cash Flow

Stock price divided by free cash flow per share, measuring cash value.

Price-to-Rent Ratio

Home price divided by annual rent, assessing housing affordability.

Price-to-Sales (P/S)

Stock price divided by revenue per share, valuing revenue generation.

Price to Tangible Book Value (PTBV)

Stock price divided by tangible book value, excluding intangibles.

Price Value of a Basis Point (PVBP)

Change in bond price for a 1-basis-point yield change, measuring sensitivity.

Price-Weighted Index

Index where stocks are weighted by price, like the Dow Jones.

Prima Facie

Evidence sufficient to establish a case, used in financial disputes.

Primary Market

Where new securities, like IPOs or bonds, are issued to investors.

Prime Brokerage

Services for hedge funds, like financing or trade execution, by large banks.

Prime Cost

Direct costs of production, like materials and labor, excluding overhead.

Prime Rate

Interest rate banks charge their best customers, influencing loan pricing.

Principal

The original loan or investment amount, excluding interest or returns.

Principal-Agent Problem

Conflicts when agents prioritize their interests over principals’, like in finance.

Principal-Agent Relationship

Arrangement where an agent acts for a principal, common in investments.

Principal, Interest, Taxes, Insurance (PITI)

Total mortgage payment components, used in affordability calculations.

Prisoner's Dilemma

Game theory scenario where self-interest leads to worse outcomes, used in finance.

Private Banking

Tailored financial services for high-net-worth individuals, like wealth management.

Private Company

A non-publicly traded firm, often closely held, with fewer regulations.

Private Equity

Investments in private firms or buyouts, seeking high returns.

Private Equity Real Estate

Investing in real estate via private funds, targeting income or appreciation.

Private Finance Initiative

Public-private partnerships funding infrastructure, like schools, with private capital.

Private Good

Goods consumed by one person, like food, unlike public goods.

Private Investment Fund

Pooled investments, like hedge funds, for accredited investors.

Private Investment in Public Equity (PIPE)

Private investors buying public company shares, often at a discount.

Private Placement

Selling securities to select investors, avoiding public offering regulations.

Private Sector

Non-government businesses or entities, driving economic activity.

Privatization

Transferring public assets to private ownership, like utilities, to boost efficiency.

Privileged Communication

Confidential exchanges, like client-advisor talks, protected from disclosure.

Pro Forma

Projected financial statements, used for planning or acquisitions.

Pro Forma Invoice

A preliminary invoice estimating costs, not a final demand for payment.

Pro Rata

Proportionate allocation, like dividends or debt payments, based on share.

Probability Density Function (PDF)

Statistical function describing variable probabilities, used in risk models.

Probability Distribution

Describes likelihood of outcomes, like returns, in financial analysis.

Probate

Legal process validating a will and distributing assets after death.

Probate Court

Court overseeing estate settlement, impacting inheritance and taxes.

Procurement

Acquiring goods or services, critical for cost management in finance.

Procyclic

Economic factors moving with the business cycle, like consumer spending.

Producer Price Index (PPI)

Measures wholesale price changes, signaling inflation trends.

Producer Surplus

Difference between what producers receive and their minimum acceptable price.

Product Differentiation

Creating unique products to gain market advantage, like branded financial services.

Product Life Cycles

Stages of a product’s market life: introduction, growth, maturity, decline.

Product Line

A group of related products, like banking services, sold by a firm.

Product Portfolio

A company’s range of products or services, impacting revenue diversity.

Production Costs

Expenses to produce goods, like labor or materials, affecting profitability.

Production Efficiency

Maximizing output with minimal inputs, reducing financial waste.

Production Possibility Frontier (PPF)

Curve showing maximum output combinations with limited resources.

Productivity

Output per unit of input, like labor, driving economic and financial growth.

Profit

Revenue minus expenses, a key measure of financial success.

Profit and Loss Statement (P&L)

Financial report showing revenue, expenses, and net income over a period.

Profit Before Tax (PBT)

Earnings before tax deductions, reflecting operational profitability.

Profit Centers

Business units responsible for generating revenue and profits, tracked separately.

Profit Margin

Net income divided by revenue, measuring profitability efficiency.

Profit-Sharing Plan

Employee compensation tied to company profits, incentivizing performance.

Profits Interest

Equity-like compensation in partnerships, tied to future profits.

Profitability Index (PI)

Ratio of project’s present value to initial investment, guiding decisions.

Profitability Ratios

Metrics like ROE or profit margin, assessing financial performance.

Program Evaluation Review Technique (PERT)

Project management tool estimating timelines, used in financial planning.

Progress Billings

Invoicing based on project milestones, common in construction or contracts.

Progressive Tax

Tax rate increasing with income, like U.S. income tax.

Project Finance

Funding large projects with non-recourse loans, tied to project cash flows.

Project Management

Planning and executing projects, critical for financial efficiency.

Projected Benefit Obligation (PBO)

Estimated pension liability, assuming future salary increases.

Promissory Estoppel

Legal principle enforcing promises relied upon, like loan commitments.

Promissory Note

A written promise to repay a debt, specifying terms and interest.

Promoter

An individual or entity driving an investment or business venture.

Promotion

Marketing or advancing a product, like financial services, to boost sales.

Proof of Funds (POF)

Documentation verifying available funds, used in real estate or investments.

Proof-of-Stake (PoS)

Blockchain consensus where validators stake crypto to confirm transactions.

Proof of Work (PoW)

Blockchain mechanism requiring computational work to validate transactions, like Bitcoin.

Property

Assets like real estate or equipment, valued in financial statements.

Property Insurance

Coverage for property damage or loss, like from fire or theft.

Property Management

Overseeing real estate operations, like maintenance or rent collection.

Property, Plant, and Equipment (PP&E)

Long-term tangible assets, like buildings, on balance sheets.

Property Rights

Legal ownership of assets, critical for financial transactions or investments.

Property Tax

Tax on real estate value, funding local government services.

Property Tax Deduction

U.S. tax break for property taxes paid, reducing taxable income.

Proportional Tax

A flat tax rate applied to all income levels, like some sales taxes.

Proprietary Trading

Banks or firms trading their own capital for profit, often risky.

Proration

Allocating costs or benefits proportionally, like taxes or dividends.

Prospect Theory

Behavioral theory on decision-making under risk, impacting financial choices.

Prospectus

A document detailing an investment offering, like an IPO, for investors.

Protectionism

Policies like tariffs restricting trade to protect domestic industries.

Protective Put

Buying a put option to hedge a stock position, limiting downside risk.

Provident Fund

A retirement savings plan, often mandatory, common in countries like India.

Provision

Funds set aside for expected losses, like bad debts or taxes.

Provision for Credit Losses

Bank reserves for expected loan defaults, impacting earnings.

Proxy

Authorization for another to act or vote, like in shareholder meetings.

Proxy Fight

Competing groups seeking shareholder votes to control a company.

Proxy Statement

Document detailing issues for shareholder votes, like board elections.

Proxy Vote

Voting by proxy on behalf of a shareholder, common in corporate governance.

Public Company

A firm with shares traded publicly, subject to strict regulations.

Public Company Accounting Oversight Board (PCAOB)

U.S. body overseeing audits of public companies, ensuring accuracy.

Public Good

Non-excludable, non-rivalrous goods, like clean air, funded publicly.

Public Limited Company (PLC)

UK public company with shares traded on exchanges, like an LLC.

Public-Private Partnerships

Collaboration between government and private firms for projects, like infrastructure.

Pullback

A temporary price decline in an uptrend, offering buying opportunities.

Pump-and-Dump Scheme

Artificially inflating a stock price to sell high, an illegal tactic.

Pump Priming

Government spending to stimulate economic growth, like stimulus packages.

Purchase Annual Percentage Rate (APR)

Interest rate on credit card purchases, affecting borrowing costs.

Purchasing Managers' Index (PMI)

Indicator of manufacturing or service sector health, predicting economic trends.

Purchase Money Security Interest (PMSI)

Lender’s claim on financed goods, like equipment, until paid.

Purchase-Money Mortgage

A mortgage from a seller to buyer, financing a property purchase.

Purchase Price In Finance

The cost of an asset, impacting capital gains calculations.

Purchasing Power

The amount of goods/services money can buy, affected by inflation.

Pure Play

A company focused on one business line, like a single-sector stock.

Pure Risk

Risk with only loss potential, like natural disasters, insurable.

Push Down Accounting

Recording acquired assets at fair value on a subsidiary’s books.

Put

An option to sell an asset at a set price, used for hedging or speculation.

Put-Call Parity

Relationship ensuring puts and calls are priced consistently with the underlying.

Put-Call Ratio

Put volume divided by call volume, indicating market sentiment.

Put Option

A contract allowing the holder to sell an asset at a set price.

Pyramid Scheme

Fraudulent scheme promising returns from recruiting others, not product sales.