Price-Earnings (P/E) Ratio – The most common measure of how expensive a stock is. It is calculated by taking the current market price of a security and dividing it by its annual earnings.

Passive Asset Management – Passive Management is the opposite of Active Management. It is a style of management where the manager believes the market is efficient and investing in index funds is favored because they have historically outperformed the majority of actively managed funds. Passive managers believe there are no undervalued funds in the marketplace and that they can only match the performance of a similar index fund.

Passive Income – Income realized from investments in real estate or limited partnership investments.

Passive Investment – An investment in real estate or in a limited partnership (Direct Participation Program (DPP).

Pass-Through Certificate – A security representing the holder’s participation in a pool of securities such as mortgages. Payments from the underlying securities are passed-through to the certificate holders.

Payroll Deduction Savings Plan 401K plan – A corporate pension plan to which an employee contributes a percentage of his or her salary in pre-tax dollars via payroll deduction for the purpose of saving for retirement.

Philadelphia Stock Exchange (PHLX) – A regional stock exchange that trades stocks, options, and foreign currency options.

Pink Sheets – A daily listing of bid and ask prices published by the National Quotation Bureau and used by financial institutions to obtain financial information for Over The Counter (OTC) stocks not included in the daily NASDAQ OTC listings.

Political Risk – The risk of actions of a foreign government affecting that country’s debt securities and currency value.

Portfolio Income – Income earned from investments, including dividends, interest, royalties and capital gains.

Portfolio Rebalancing /Rebalancing – The process of realigning the weightings of one’s portfolio of assets to return the percentage allocations back to the original intended allocations. Usually done annually.

Preferred Stock – An equity security that is senior to the common stock. It pays a fixed dividend rate and usually has no voting rights. It has preference over common shares as to dividend distributions and in the case of a liquidation.

Premium Bond – A bond whose market price is greater than its par value.

Primary Market – The market in which the issuer first offers and sells its securities to the public with the sales proceeds going to the issuing corporation.

Primary Offering – The issuance of new securities by a company to the public under a prospectus as required by the Securities Act of 1933.

Prime Rate – A short-term interest rate that commercial banks charge their most credit-worthy business customers which are usually large corporations.

Principal – A partner, officer, or senior manager of a business such as a broker/dealer or investment advisor.

Principal Transaction – A trade where a member firm acts as a dealer selling the security to the customer out of the firm’s inventory or buying the security from the customer for the firm’s own inventory.

Private Placement – An exempt transaction under Regulation D that can be sold without a prospectus to an unlimited number of accredited investors and a maximum of thirty-five (35) non-accredited investors.

Prospectus – A formal legal document containing detailed information that an investor needs to make an informed investment decision about a security and is required by, and filed, with the Securities and Exchange Commission (SEC).

Public Offering Price – The price at which new securities are sold to the public.

Publicly Traded Fund – A closed-end management company commonly known as a publicly traded or exchange traded fund that issues a fixed number of negotiable shares to the public. These shares are not redeemable back to the company.

Purchasing Power Risk – The risk that inflation will erode the value of the money earned from investments. It is also called inflation risk.

Put Feature – A provision of a bond contract or a preferred stock contract that permits the holder to sell (put) the securities back to the issuer at a pre-established price prior to maturity.

Put Option – A contract that gives the holder the right, but not the obligation, to sell a fixed amount of securities at a specified price for a fixed time period.

Puttable Bond – A bond that can be redeemed at face value by the holder at a specified time before maturity. This is typically used when interest rates are rising, allowing the holder to receive the par value of the bond which can be re-invested by the holder at higher interest rates.