FINANCIAL GLOSSARY : P
Par value
The value of the security when it is first issued, also known as nominal value.
Passive management
Management strategy to buy a well diversified portfolio to represent a broad-based market index without attempting to search out mispriced securities
Penny shares
Shares that sells for just a few pence and are considered to be at a high risk and extremely volatile by most investors.
Personal Equity Plan (PEP)
Tax-efficient scheme for investing in shares , unit trusts, investment trusts, and corporate bonds. Since April 1999, PEPs have been replaced by the Individual Savings Account (ISA), which is a similar tax-free investment account.
Personal Investment Authority (PIA)
Self-Regulating Organisation which was responsible for authorising and policing independent financial advisers and other firms marketing financial products and services. It has now been absorbed into the Financial Services Authority under the Financial Services and Markets Bill.
Personal Pension Plan (PPP)
Private pension scheme run by insurance companies, unit trusts, building societies and banks. It aims to provide you with a pension at retirement plus other benefits. Unlike an occupational pension scheme, a personal pension plan need not be connected with a specific job.
Placing
An arrangement whereby a new issue of shares are not offered to the general public, but instead are sold to a small number of investors, usually, institutions investors such as pension funds.
Pooled funds
Collective or mutual funds.
Portfolio
A portfolio is a collection of different investments that make up your total investment holding.
Preference share
A type of share that pays a fixed percentage dividend. Preference shareholders come before the ordinary shareholder when it comes to payment of dividends and if a company is wound up. However, as with Ordinary shares a dividend is only distributed if the company has sufficient distributable profits available.
Preliminary results
The results reported by a company for a full financial year before the publication of the company's annual report of accounts.
Premium
A measure of how far the share price of an investment trust is above its net asset value, expressed as a percentage of the net asset value per share.
Pre-tax profits
A company's profits before the deduction of corporation tax.
Price-earnings ratio (PE)
The P/E ratio is the most important yardstick for assessing the relative worth of a share. It reflects the markets appraisal of the shares future prospects. A high P/E ratio suggests a company has good prospects of achieving above-average growth in the future. The P/E ratio of a company is calculated by dividing its share price by its earnings per share.
Profit and loss account
The profit and loss account is an important part of a company's annual accounts and gives the details of the company's trading performance for the previous financial year.
Prospectus
A document which has to be published by a company wanting to issue shares to the public in compliance with the rules and regulations of the Stock Exchange. It provides information on the company's business, its history, financial structure and future prospects.
Public Limited Company (plc)
A company which is registered as a public limited company, has an unlimited number of ordinary shareholders and can offer its shares to the public.
Purchased life annuity
An annuity which you choose to buy that gives you a guaranteed income for life.
