Penny stocks

Penny stocks – Low-priced issues, often highly speculative, selling at less than $1 a share. Frequently used as a term of disparagement, although some penny stocks have developed into investment-caliber issues.

Portfolio

Portfolio – Holdings of securities by an individual orinstitution. A portfolio may contain bonds, preferred stocks, common stocks and other securities.

Preferred stock

Preferred stock – A class of stock with a claim on the company's earnings before payment may be made on the common stock and usually entitled to priority over common stock if the company liquidates. Usually entitled to dividends at a specified rate - when declared by the board of directors and before payment of a dividend on the common stock - depending upon the terms of the issue.

Premium

Premium – The amount by which a bond or preferred stock may sell above its par value. May refer, also, to redemption price of a bond or preferred stock if it is higher than face value.

Price-to-earnings ratio

Price-to-earnings ratio – A popular way to compare stocks selling at various pricelevels. The P/E ratio is the price of a share of stock divided by earnings per share for a 12-month period.For example, a stock selling for $50 a share and earning$5 a share is said to be selling at a price-to-earningsratio of 10.

Prime rate

Prime rate – The lowest interest rate charged by commercial banks to their most credit-worthy customers; other interest rates, such as personal, automobile, commercial and financing loans are often pegged to the prime.

Profit-taking

Profit-taking – Selling stock that has appreciated in valuesince purchase, in order to realize the profit. The term is often used to explain a downturn in the market following a period of rising prices.

Prospectus

Prospectus – The official selling circular that must be given to purchasers of new securities registered with theSecurities and Exchange Commission. It highlights themuch longer Registration Statement file with the Commission.

Proxy

Proxy – Written authorization given by a shareholder to someone else to represent him or her and vote his or her shares at a shareholders meeting.

Prudent Man Rule

Prudent Man Rule – An investment standard. In some states, the law requires that a fiduciary, such as a trustee, may invest the fund's money only in a list ofsecurities designated by the state - the so-called legal list. In other states, the trustee may invest in a security if it is one that would be bought by a prudent person of discretionand intelligence, who is seeking a reasonable income and preservation of capital