Category: P

Stock that has a first claim on assets. If distress should occur these stockholders get first dibs.

A strategy that uses external borrowed funds instead of internal funds. Refer to quasi arbitrage.

When investors get cashflows from assets in modified or fully modified forms. The assets can be mortgages, certificates, bonds, and loans.

When shareholders must pay losses from their personal assets. Refer to limited liability.

Risk caused by adverse movements in the market. It is preventable by diversifying. Refer to correlation and correlation risk.

A security that pays investors periodic dividends but does not allow them board vote. There are many forms of this stock.

An investment that comes from a private not corporate investor. The investor usually exits at the first public sale.

An insurer owned by a single company. They write insurance for that company only. While easy to manage it may be more risky. AKA single parent captive. Refer to agency captive, captive,

An option whose payment depends on the ending market price of an asset. There are many types of this option. Refer to path dependent option.

The risk that occurs when a large option trades near strike price at its maturity. Whether above or below the strike price it changes the hedge.

How a portfolio is managed. Risk and returns are measured to create diversification strategies.

Funding arranged before loss is incured. It is less expensive than post loss financing because the capital is there when its needed. Refer loss financing.

A debt not registered with the securities regulator. It is sold on a ceveat emptor basis to only experienced investors. It is illiquid and only transfers to a short list of buyers.

A swap transaction that allows an insurer to diversify their portfolio by exchanging uncorrelated catastrophic hazards. Refer to catastrophe reinsurance swap.

When a counterbid is placed to prevent hostile takeover.

An option whose payment depends on the price path of the asset at another time. There are many types of this option. Refer to path independant option.

The records used to report securities and penny stocks. Before the internet it was recorded on pink paper.

A strategy that hold a long or short position for a week to several months. It is used in the short term but has a better chance than momentum trading.

When an insurer can write a large amount of policies on one line or risk.

The potential a company will file for bankruptcy. It is used to calculate the default in default models.