P/E Ratio
Price to Earnings Ratio: The relationship between a stock's price and its earnings per share. The ratio, also referred to as the "multiple", gives an investor an approximation of how much they are paying for a corporation's earning power.

Par Value
When the market value of a fixed income investment is equivalent to its face value.

Penny Stocks
Stock that typically sells for less than $1 a share, although it may rise to as much as $10 a share after the initial public offering, usually because of heavy promotion. Penny stocks are issued by companies with a short or erratic history of revenues and earnings, and therefore are more volatile than those of large, well-established firms.

Portfolio
Word used to describe the collection of various investment assets held by a particular individual or entity.

Preferred Stock
Ownership shares of a company that have no voting rights but do have a set, guaranteed dividend payment.

Premium
In general, the amount by which one security price exceeds another security price.

Price
Value the market determines as fair for any investment.

Price Compression
Limitation faced by callable bonds in a falling interest rate environment. The upside price potential of a callable bond in a falling interest rate environment is generally limited to its call price. A non-callable bond has no such risk to its upside price potential.

Price Risk
Risk that when interest rates change so will the price of fixed income investments.

Primary Market
The Initial market for the distribution of securities. After this initial sale they are traded on the secondary market.

Prime Rate
The interest rate banks charge their most creditworthy commercial customers. Banks use the prime as a base to set rates for credit cards, home-equity loans, and other loans, including loans to small and medium-size businesses.

Principal
Original, or face, amount an investor purchases in a particular instrument.

Private Placement
The sale of stocks or other investments directly to an investor. The securities in a private placement don't have to be registered with the Securities and Exchange Commission

Probate
The judicial procedure whereby the will of a deceased person is presented to a court and an executor or administrator is appointed to carry out the will's instructions.

Profit
The amount left after the company's taxes and all other expenses have been paid. Also called net income, or earnings.

Profit Margin
A measure of a company's profitability, cost structure and efficiency, calculated by dividing a measure of profits by sales.

Profit-taking
Selling securities after a recent, often rapid price increase.

Prospectus
A formal, written offer to sell securities that sets forth the plan for a proposed or existing business. The prospectus must be filed with the Securities and Exchange Commission and given to prospective buyers. A prospectus includes information on a company's finances, risks, products, services and management.

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.

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.