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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 Since April 1999, PEPs have been replaced by the Individual Savings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.
