Your Free Online Legal Dictionary • Featuring Black’s Law Dictionary, 2nd Ed.

Category: P

PREFERRED HABITAT THEORY

A theory which states that individual investors generally have a preferred limit of lengths when it comes to the maturity of any bond, and an investor is only liable to go out

PREMIUM NOTICE

A notice issued in order to provide the exact date on which a premium will become payable.

PACKING LIST

A packing list is a catalogue of all the articles that are included in a package that has been shipped from one place to another. A packing list is helpful for confirming

PAIR AND SET CLAUSE

The pair and set clause is usually a clause which states that if one half of a pair, or set is damaged, the value of the whole pair will be analyzed. However,

PAPER PROFIT (OR LOSS)

Increase recorded in the market value of any asset, which will turn into actual profit once the asset has been sold. The same situation applies to paper loss.

PARAMETER

A value that can be defined, measured, is constant but can have variable properties, values or dimensions. A parameter is chosen commonly from a set of data, as it is important to

PARKINSON’S LAW

A law which states that work is spread over the time given for its completion. It states that a large sized bureaucracy will generate for itself a significant amount of work in

PARTY SELLING

A method of selling in which the sellers carry out their operations from the residence of the customers, on a rotational basis. The customer obviously earns a commission for allowing the seller.

PASSIVE TRUST

A kind of trust in which the person who is being trusted need not perform any task, and hence, the trust is regarded as a complete title transfer to the person who

PARTICIPATION CERTIFICATE

A security representing investment interest in an asset. Typically a mortgagebacked securities. Refer to passthrough security.

PERIODIC COLLATERAL

When a financial institution revalues collateral to make adjustments. Refer to upfront collateral.

POLICY CAP

The maximum amount payable to the insured by the insurer. AKA aggregate limit and exhaustion point.

PRESENTVALUE

When future cash flows are brought to current value by using discount rates. Refer to discount cash flow, future value, and net present value.

PUMP AND DUMP

When investors are lied to by the company. They are given postive news that is false to prompt them to buy. It drives up the stock price but the investor has just

PUT SPREAD

An option position that occurs when options are traded with different strike prices. They have the same expiration date. Refer to bull, bear, and call spread.

PASSIVE INVESTMENT STRATEGY

When a portfolio is managed using minimum effort. This occurs when an index seldom moves their assets. Refer to active index strategy and index fund.

PETRODOLLARS

Cash flow paid to oil producing nations. It is rerouted to the western banking system.

PORTFOLIO

Assets managed together to reduce risks and improve investment opportunities. Refer to diversification, risk, and theory.

PREEMPTIVE RIGHT

A shareholders right at first choice on buying stocks. Any left are available to the market at large. AKA antidilution provision and subscription priviledge. Refer to rights issue.

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