This is a glossary of terms that are, for the most part, unique to the world of financial investigations, or terms that have a different meaning than that which is commonly understood when they are used in this context.

Paper Profit (Loss): Any profit or loss on a security that is not realized because it has not actually been sold.

Par: 1) The face value or principal value of a bond, usually $1,000 per bond. A bond trading at par is trading at its face value. 2) A preferred stocks' face value, usually $100 per share. The stock's book value, liquidating value and dividend payments are based on the par value. 3) A common stock's stated value. It is primarily used for bookkeeping purposes and has no relationship to its market value.

Partial Delivery: Term used when a seller does not deliver the full amount of shares sold. Partial delivery would occur, for example, if 500 shares were sold and the seller only delivers 400.

Payment Date: Date on which declared stock dividend or bond interest is paid to holders of record.

Payment-In-Kind Securities (PIK): Bonds and preferred stocks whose interest and dividends are paid in additional bonds or preferred stock.

Payout Ratio: The percentage of a corporation's earnings that are paid to shareholders as dividends. For example, a corporation that pays a $.12 dividend out of every $1.00 of earnings has a payout ratio of 12%.

P/E Ratio: The relationship between a stock's price and its earnings per share. It is calculated by dividing the stock's price per share by earnings per share for a twelve month period. For instance, a stock selling for $25 a share and earning $5 a share is said to be selling at a P/E ratio of 5. The ratio, also known as the "multiple", gives an investor an approximation of how much they are paying for a corporation's earning power. Low P/E stocks are usually in mature industries. They may be blue chip or out of favor companies. In either case, their growth potential is limited. Companies with high P/E ratios (over 20) are usually up-and-comers that are fast growing. These companies are riskier investments.

Penny Stock: A low priced stock that is traded in the over-the-counter market. Although a stock is categorized as a “penny” stock if it sells for less than $5 a share, they typically sells for less than $1a share. Penny stocks are very volatile and speculative.

Pension Fund: A fund that is set up to pay pension benefits to retired employees of a corporation, government entity, or to other organizations. The fund's earnings are tax deferred until withdrawn by the retiree, who is then responsible for paying taxes on the amount withdrawn.

Performance Fund: A mutual fund whose goal is to achieve maximum growth of capital--sometimes called "aggressive growth funds". The fund invests in companies that are in high growth cycles. Such companies typically do not pay dividends as its earnings are plowed back into the firm for expansion. Although these funds have a higher risk than a growth or balance fund, it is not considered to be speculative.

Perpetual Warrant: A warrant that gives the holder the right to buy a fixed number of common shares of stock at a fixed price. It does not have an expiration date.

PFD (Preferred Stock): An abbreviation that is commonly used on order tickets to indicate a preferred stock. A preferred stock is a type of capital stock that pays dividends at a set rate (at the time of issuance). Dividend payments to preferred holders must be made before common stock dividends can be paid. Preferred stocks usually do not have voting rights.

PHLX: Abbreviation for the Philadelphia Stock Exchange.

PIK Securities (Payment-In-Kind): Bonds and preferred stocks whose interest and dividends are paid in additional bonds or preferred stock.

Pink Sheets: A National Quotations Bureau daily publication that lists market maker's bid and asked prices from the prior day for over-the-counter securities. Equity securities are printed on long pink paper, hence the name. Debt securities are printed on long yellow sheets, hence their name, yellow sheets.

P&L (Profit And Loss Statement): A summary of a corporation's revenues, costs, and expenses within an accounting period--also called an "Income Statement".

PLC: A UK public limited company
Pledge: The transfer of property, such as securities, to a creditor (or lender) as collateral for an obligation--such as securities bought on margin or a bank loan. "Assign" differs from pledge (or hypothecate) as an assignment involves a transfer of title, whereas pledging does not.

Plus: 1) A sign used to indicate that a transaction for a particular security was at a higher price than the previous transaction. 2) A fractional variation used to indicate a Treasury note or bond that is being quoted in 64ths. For instance, 93.16+ means 93 and 33/64th of par. The numerator is 2 times 16 plus 1; 64 is the denominator. 3) In newspaper stock listings, a + in the change column means that the closing price of a security is higher than the previous day's close by the amount in the column.

Plus Tick: Security transaction executed at a price higher than the preceding transaction in the same security--also called an "uptick". For each security in which its last price is higher than the preceding transaction, a plus sign is displayed next to its price at the trading post on the floor of the NYSE. Short sales can only be executed on upticks or zero plus ticks.

PMV (Private Market Value): The aggregate value of a corporation if it is broken into individual operations and each piece is given its own stock price--also called "breakup value" or "takeover value". Analysts look for corporations with high PMV relative to its current market value to identify potential takeover targets and bargains. It differs from the corporation's liquidating value because it does not include going-concern value.

POA (Power Of Attorney): Written document that permits a third party to do transactions on the behalf of the person signing the document. Depending on the specifications within the document, a power of attorney may be full or limited.

Point: 1) In stocks, a point equals $1. If ABC shares rise 1 1/4 points, each share has risen $1.25. 2) In bonds, a point equals $10 since a bond is quoted as a percentage of $1,000. A bond that rises 2 1/2 points gains 2.5% of 1,000, or $25. Thus, a bond that advances from 89 to 91 1/2 means a gain in dollar value from $890 to $915. 3) In market averages, the point is a unit of movement in an average. It is not equivalent to any dollar value. For example, if the Dow-Jones Industrial average rises from 4236 to 4258.5, it has risen 22.5 points.

PORTAL: The NASD's trading system for secondary trading of unregistered securities in transactions exempt from the registration and a prospectus delivery requirement of the Securities Act of 1933 pursuant to SEC Rule 144A.

Portfolio: The holdings of more than one stock, bond, cash equivalent or other asset by an individual or institution. A portfolio may be designed to achieve the investors goals--such as obtaining maximum returns or reducing risk through diversification.

Position Building: The accumulation of a long or short position in such a manner as to not push the security's price up or down. This method of slowly building a large position is used by institutional investors.

Positive Yield Curve: On debt securities of similar quality, a condition in which the yields on long term securities are higher than the yields on short term securities. Typically, short term interest rates are lower than long term rates--those who invest their money for longer periods are taking more risk.

Post: A structure shaped like a horseshoe that is located on the floor of the NYSE. Specific securities are traded at each post. Monitors surrounding the post display quotations for the securities traded at that particular post.

Power Of Attorney (POA): Written document that permits a third party to do transactions on the behalf of the person signing the document. Depending on the specifications within the document, a power of attorney may be full or limited.

Preemptive Right: A right given to shareholders that allows them to purchase shares of a new issue before it is offered to non-shareholders. This allows shareholders to retain the same percentage of ownership in a corporation.

Preferential transfer: A disposition of an asset that is unfair to other creditors of the transferor.

Preferred Stock: A preferred stock is a type of capital stock that pays dividends at a set rate (at the time of issuance). Dividend payments to preferred holders must be made before common stock dividends can be paid. Preferred stocks usually do not have voting rights.

Pre-filing notice: Mailed by the IRS to parties (tax payers) who are believed to be participating in fraudulent trust programs. The notice requests that the receiver seek professional counsel before filing their next tax return.

Preliminary Prospectus: A preliminary prospectus is given to investors when brokers obtain indications of interest. Although the document does not have all the information included in the offering circular, it does include the major facts. A preliminary prospectus is often called a "red herring" because its front-page notice is printed in red ink. The notice states that the preliminary prospectus is "subject to completion or amendment" and "shall not constitute an offer to sell...".

Premium Bond: A bond that is selling above its face value or redemption price.

Premium Income: Money received by option writers (sellers) from option buyers in payment for specific rights. A person who writes options to collect premiums hopes that the market price for underlying security remains stable. A put writer does not want the security to fall, and a call writer does not want it to rise.

Premium Raid: An attempt to take control of a company by offering its shareholders an amount over the current market value of their shares.

Pretax Earnings Or Profit: The amount of profit a corporation earns before paying its taxes. It is calculated by subtracting all costs and expenses (other than taxes) from total revenues.

Price Change: The difference in a security's price at the close of a trading session as compared to its previous session's closing price. In the case of an average (or index), all of its components' price changes are taken into account.

Price/Earnings Ratio (P/E): The relationship between a stock's price and its earnings per share. It is calculated by dividing the stock's price per share by earnings per share for a twelve month period. For instance, a stock selling for $25 a share and earning $5 a share is said to be selling at a P/E ratio of 5. The ratio, also known as the "multiple", gives an investor an approximation of how much they are paying for a corporation's earning power. Low P/E stocks are usually in mature industries. They may be blue chip or out of favor companies. In either case, their growth potential is limited. Companies with high P/E ratios (over 20) are usually up-and-comers that are fast growing. These companies are riskier investments.

Price Range: The high and low price that a security traded at during a designated period. In annual reports, a corporation will show the price range for its fiscal year. In daily newspapers, the period is a rolling 52 weeks.

Prime Paper: The best quality commercial paper as rated by agencies such as Moody's Investors Services and is investment grade. Moody's has three ratings for prime paper--P1 (highest quality), P2 (higher quality), and P3 (high quality).

Prime Rate: Interest rate charged by banks to their most creditworthy and largest corporate customers. The prime rate is used as a base rate for other types of loans such as personal, commercial and financing. These types of loans are normally of an interest rate a few points above the prime rate. Additionally, as the customer's creditworthiness declines, the interest rate will increase.

Principal: 1) The face value or par value of a debt instrument that is separate from interest. 2) A person's capital, or the amount invested. 3) An employee of a securities firm who has supervisory responsibilities.

Principal Amount: The face value of a bond, or other obligation, that is required to be paid to the holder at maturity.

Principal Stockholder: A shareholder who owns a 10% or more voting stock in a registered company.

Private Market Value (PMV): The aggregate value of a corporation if it is broken into individual operations and each has its own stock price--also called "breakup value" or "takeover value". Analysts look for corporations with high PMV relative to its current market value to identify potential takeover targets and bargains. It differs from the corporation's liquidating value because it does not include going-concern value.

Private Purpose Bond: A municipal bond whose interest may (or may not) be federally tax-exempt--also called "private activity bonds". It is dependent on the percentage of the bond's benefits that goes to private activities. A private purpose bond for a sports arena would not be tax-exempt, while one for an airport would. A sports arena generally does not help the general public whereas an airport can help the entire community.

Probate: The legal process for the distribution of the estate of a decedent whereby a decedent's will is proffered to a court and an executor is appointed to handle the settlement of the will.

Proceeds: An amount received from selling a security after commissions are deducted.

Producer Price Index: A measure of changes in wholesale prices. The index is calculated monthly by the US Bureau of Labor Statistics. Its components are broken down by industry sector, commodity and processing stage.

Profit: The difference between a security's purchase price and selling price. If the selling price is higher than the purchase price, there is a profit. Conversely, if the selling price is lower than the purchase price, there is a loss.

Profit And Loss Statement (P & L): A summary of a corporation's revenues, costs, and expenses within an accounting period--also called an "Income Statement".

Profit Sharing Retirement Plan: A plan that is established so that a corporation's employee may share in the company's profits. When there are profits, the corporation makes an annual contribution for each of its employees. The funds within the plan are tax deferred until withdrawn by the employee upon retirement or leaving the firm. Profit sharing plans are considered institutional investors.

Profit Taking: Selling securities that have appreciated in value since purchase, to realize the profit. In a rising market, profit taking temporarily pushes down prices.

Program Trading: Use of a computer-driven program by arbitrageurs and institutional traders for buying and selling baskets of 15 or more stocks. The program monitors various markets and securities and gives buy and sell signals when opportunities for profits arise or when market conditions warrant the accumulation or liquidation of a position.

Proprietorship: An unincorporated business owned by one person who is entitled to all the profits (or losses) generated from the business and is responsible for its taxes and other liabilities.

Prospectus: A printed document that summarizes a corporation's registration statement for a new issue of non-exempt securities that was filed with the SEC. It details material information about the corporation and the security being issued. A prospectus must be given to all buyers and potential buyers of the new issue. A preliminary prospectus is given to investors when brokers obtain indications of interest. Although the document does not have all the information included in the offering circular, it does include the major facts. A preliminary prospectus is often called a "red herring" because its front-page notice is printed in red ink. The notice states that the preliminary prospectus is "subject to completion or amendment" and "shall not constitute an offer to sell...".

A “Red Herring” Prospectus is industry jargon for a preliminary prospectus issued by underwriters or issuers to gauge interest in a prospective offering. It receives its name from the warning, printed in red, that information in the document is incomplete or subject to change before the issue.

Proxy: A written authorization by a shareholder allowing a representative to vote for or against business proposals and directors at annual meetings. The results of these votes are announced at the meeting.

Proxy Fight: A strategy used by an acquiring company in its attempt to take control of a target company. The acquirer and target solicit the target's shareholders to obtain proxy votes. Whichever company obtains more votes, wins--that is, if the acquirer receives the majority of the proxy votes, it has effectively gained control of the target without paying a premium price for the firm.

Proxy Statement: Information given to shareholders on company matters that need to be voted on. The statement is sent in conjunction with the proxy solicitations.

Prudent Man Rule: An investment standard used by fiduciaries as a guide for identifying acceptable investment vehicles. Some US states allow the fiduciary to invest in securities that would be bought by a prudent man of discretion and intelligence, and who looks for a reasonable income and preservation of capital. Other states require that the fiduciary only invest in a list of securities designated by the state.

PSE (Pacific Stock Exchange): Abbreviation used for the Pacific Stock Exchange.

Public Information Office: A department of the NYSE that answers investors inquiries on various aspects of securities investing. Major areas of inquiries involve locating brokerage firms that will take small orders and explaining investing strategies.

Publicly Held: A company whose shares are publicly available to the general public. A publicly held company is usually regulated by the SEC.

Public Offering: An offering of new securities to the investing public at a public offering price that has been agreed upon by the issuer and the investment bankers. This can only be done after the issue has been registered with the SEC. The term is also used when referring to a secondary distribution of securities previously issued.

Public Offering Price: The price at which a new issue is offered to the public by underwriters.

Pump and Dump: An unlawful practice where a small group of informed people buy a stock before they recommend it to thousands of investors. The result is a quick spike in stock price followed by an equally fast downfall. The perpetrators who bought the stock early sell off when the price peaks at a huge profit. Small companies are more volatile and it's easier to manipulate a stock when there's little or no information available about the company.

Pure Equity Trust: A special type of irrevocable trust marketed by promoters. The trust assets are obtained by an "exchange" of a certificate of beneficial interest in return for the assets, as opposed to traditional means, such as by gifting.

Pure Trust: A contractual trust as opposed to a statutory trust, created under the Common Law. A pure trust is one in which there must be a minimum of three parties(the creator or settlor (never grantor), the trustee and the beneficiary(and each is a separate entity. A pure trust is claimed to be a lawful, irrevocable, separate legal entity.

Put Bond: A bond, at the holder's option, that can be redeemed at face value on a specific date or dates. In return for this right, the holder receives a lower yield than on a similar fixed-rate bond.

Put Option: A contract that gives the holder the right to sell a specified number of shares (usually 100) of a particular stock, stock index or dollar face value of bonds, at a predetermined price--called the "strike price"--on or before the option's expiration date. For this right, the holder (buyer) pays the writer (seller) a premium. The holder profits from the contract if the stock's price drops. If the holder decides to exercise the option (as opposed to selling it), the writer must buy the security. The writer profits when the underlying security's price remains the same, rises or drops by less than the premium received.

Put To The Seller: Term used when the holder of a long put option exercises the position. The put option writer (seller) is required to buy the underlying security at the strike price. For example, if an ABC July 50 put is "put to the seller", the writer has to buy 100 shares of ABC at $50 a share from the put holder. The actual current market price for ABC may be less than $50 a share.

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