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Paper profit (or loss) |
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An unrealized profit (or loss) on an asset still held. |
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Par value |
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The principal amount, or value at maturity, of a debt obligation. Also known
as Face Value. Preferred shares may also have par value. The interest paid
on bonds, and the dividends paid on preferred shares, are expressed as a
percentage of the par value. |
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Parity |
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A term used to describe an option contract's total premium when that premium
is the same amount as its intrinsic value. For example, when an option's
theoretical value is equal to its intrinsic value, it is said to be "worth
parity." When an option is trading for only its intrinsic value, it
is said to be "trading for parity." Parity may be measured against
the security's last sale, bid, or offer. |
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Penny stocks |
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Low-priced speculative stocks which usually trade at less than $1 per share.
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Physical delivery option |
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An option whose underlying asset is a physical good or commodity, like a
common stock or a foreign currency. When that option is exercised by its
owner, there is delivery of that physical good or commodity from one brokerage
or trading account to another. |
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Piggy back warrants |
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A second series of warrants acquired upon exercise of primary warrants sold
as part of a unit. |
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Pin risk |
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The risk to an investor (option writer) that the security price will exactly
equal the strike price of a written option at expiration; i.e., that option
will be exactly at-the-money. The investor will not know on how many of
his/her written (short) options he/she will be assigned. The risk is that
on the following Monday he/she might have an unexpected long (in the case
of a written put) or short (in the case of a written call) security position,
and thus be subject to the risk of an adverse price move. |
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Portfolio |
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Holdings of securities by an individual or institution. A portfolio may
include various types of securities representing different companies and
industry sectors. |
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Position limit |
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The maximum number of futures or options contracts any individual or group
of individuals acting in concert may hold at one time. |
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Position trading |
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An investing strategy in which open positions are held for an extended period
of time. |
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Pre-authorized contribution (PAC) plan |
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A plan offered by mutual fund companies which enables an investor to purchase
mutual fund units regularly in large or small amounts through fixed-dollar
purchases or through a fixed number of units. |
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Preferred shares |
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Shares that carry dividends at pre-determined rates which must be paid before
any dividends are paid to common shareholders. |
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Premium |
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The price of an option contract, determined in the competitive marketplace,
which the buyer of the option pays to the option writer to obtain the rights
conveyed by the option contract. |
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Present value |
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The current worth of an amount to be received in the future. In the case
of an annuity, present value is the current worth of a series of equal payments
to be made in the future. |
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Price earnings (PE) ratio |
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The market price of a common share divided by its earnings per share for
12 months. |
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Primary distribution |
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A new security issue, or one that is made available to investors for the
first time. |
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Primary market |
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The new issue market where investment dealers bring to the market new stock
issues to investors through the underwriting and distribution of these new
issues or securities. |
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Prime rate |
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The interest rate chartered banks charge to their most credit-worthy borrowers.
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Principal |
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The person for whom a broker executes an order, or a dealer buying or selling
for his or her own account. Also, an individual's capital or the face amount
of a bond. |
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Private placement |
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The private offering of a security to buyers in a minimum quantity. Re-sale
of the security is limited. |
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Profit/loss graph |
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A graphic presentation of the profit and loss possibilities of an investment
strategy at one point in time (usually option expiration), for various security
prices. |
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Profit taking |
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Buying or selling to make a profit. The process of converting paper profits
into cash. |
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Prospectus |
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A legal document describing securities being offered for sale to the public.
It must be prepared in accordance with applicable securities regulations.
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Public float |
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The number of issued and outstanding shares of a corporation excluding shares
held by persons who, individually or in conjunction with other persons,
hold 20% more of the voting securities of the corporation. |
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Put |
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An option contract that gives the holder the right to sell the underlying
asset at a specified price for a certain fixed period of time. |
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