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

Category: P

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.

PUNT

The act of speculation or being in a risky position.

PUTABLE SWAP

A swap whose structure has fixed rates. This transaction can be cancelled at a future date. Refer to callable and cancellable swap.

PASSIVE LOSS RULES

Rules limiting tax deductions and income that go untaxed. This is limited by passive source earnings.

PFANDBRIEFE

A bond that converts its assets into negotiable securities. The assets remain on the balance sheet but are reserved for investors in the event of default.

PORTFOLIO DIVERSIFICATION

Combining non related securites to ensure more profit. Refer to diversification, diversifiable risk, nondiversifiable risk, and portfolio theory.

PRIMACY

The main insurer on a policy. Refer to apportionment, divided cover, overlapping insurance, and pro rata.

PUP COMPANY

A subsidiary company that writes special risk insurance for their parent company or group.

PUTCALL PARITY

Relationships used to decide option prices that must remain to prevent arbitrage conditions. The sum price of the call option and strike price. This price must equal the sum of the put

PUBLIC DOMAIN

This term embraces all lands, the title to which is in the United States, including as well land occupied forthe purposes of federal buildings, arsenals, dock-yards, etc., as land of an agriculturalor

PRIMARY ELECTION

An election by the voters of a ward, precinct, or other small district,belonging to a particular party, of representatives or delegates to a convention which is to meet and nominate the candidates

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