Financial Theory Terms

  1. Permissible Non-Bank Activities

  2. Perpetual Bond

  3. Personal Income And Outlays

  4. Peter Principle

  5. Phantom Gain

  6. Piecemeal Opinion

  7. Planned Obsolescence

  8. Population

  9. Portable Alpha

  10. Porter Diamond

  11. Porter's 5 Forces

  12. Portfolio Lender

  13. Post-Modern Portfolio Theory - PMPT

  14. Poverty

  15. Power-Distance Index - PDI

  16. Pre-Funded Bond

  17. Predatory Pricing

  18. Predictive Analytics

  19. Preferred Creditor

  20. Prepayment Model

  21. Prepayment Privilege

  22. Present Value - PV

  23. Present Value Interest Factor - PVIF

  24. Price Ceiling

  25. Price Efficiency

  26. Price Level

  27. Price Level Targeting

  28. Price Risk

  29. Price Skimming

  30. Price Stickiness

  31. Price Tension

  32. Price-Taker

  33. Price-To-Research Ratio - PRR

  34. Principal-Agent Problem

  35. Prisoner's Dilemma

  36. Private Equity

  37. Private Good

  38. Pro-Rata Tranche

  39. Probability Distribution

  40. Problem Child

  41. Process Value Analysis - PVA

  42. Product Placement

  43. Production Volume Variance

  44. Productivity

  45. Profit/Loss Ratio

  46. Profitability Index

  47. Project Finance

  48. Proportional Spread

  49. Protest Divestment

  50. Public Good

  51. Pump Priming

  52. Purchase Fund

  53. Purchasing Managers Index - PMI

  54. Purchasing Power Loss/Gain

  55. Purchasing Power Parity - PPP

  56. Pure Risk

  57. Push On A String

  58. Put-Call Parity

  59. Pyramiding

  60. Q Ratio (Tobin's Q Ratio)

  61. Quantity Demanded

  62. Quartile

  63. Radner Equilibrium

  64. Ragnar Frisch

  65. Random Variable

  66. Random Walk Theory

  67. Rate Level Risk

  68. Rate Of Return

  69. Rational Behavior

  70. Rational Pricing

  71. Real Bills Doctrine

  72. Real Estate Mortgage Investment Conduit - REMIC

  73. Real Option

  74. Recognition Lag

  75. Recoupling

  76. Recursive Competitive Equilibrium - RCE

  77. Refi Bubble

  78. Reflexivity

  79. Regression

  80. Regulatory Risk

  81. Reinvestment Risk

  82. Remittance Float

  83. Renewable Resource

  84. Rescaled Range Analysis

  85. Research Analyst

  86. Reservable Deposit

  87. Residual Dividend

  88. Response Lag

  89. Revealed Preference

  90. Reverse Survivorship Bias

  91. Ricardo-Barro Effect

  92. Ringfencing

  93. Ripple

  94. Risk Analysis

  95. Risk Assessment

  96. Risk Curve

  97. Risk Lover

  98. Risk Management

  99. Risk Neutral

  100. Risk Parity

Hot Definitions
  1. Yield Burning

    The illegal practice of underwriters marking up the prices on bonds for the purpose of reducing the yield on the bond. This practice, referred to as "burning the yield," is done after the bond is placed in escrow for an investor who is awaiting repayment.
  2. Marginal Analysis

    An examination of the additional benefits of an activity compared to the additional costs of that activity. Companies use marginal analysis as a decision-making tool to help them maximize their profits. Individuals unconsciously use marginal analysis to make a host of everyday decisions. Marginal analysis is also widely used in microeconomics when analyzing how a complex system is affected by marginal manipulation of its comprising variables.
  3. Treasury Inflation Protected Securities - TIPS

    A treasury security that is indexed to inflation in order to protect investors from the negative effects of inflation. TIPS are considered an extremely low-risk investment since they are backed by the U.S. government and since their par value rises with inflation, as measured by the Consumer Price Index, while their interest rate remains fixed.
  4. Gilt-Edged Switching

    The selling and repurchasing of certain high-grade stocks or bonds to capture profits. Gilt-edged switching involves gilt-edged security, which can be high-grade stock or bond issued by a financially stable company such as the Blue Chip companies or by certain governments.
  5. Master Limited Partnership - MLP

    A type of limited partnership that is publicly traded. There are two types of partners in this type of partnership: The limited partner is the person or group that provides the capital to the MLP and receives periodic income distributions from the MLP's cash flow, whereas the general partner is the party responsible for managing the MLP's affairs and receives compensation that is linked to the performance of the venture.
  6. Class Action

    An action where an individual represents a group in a court claim. The judgment from the suit is for all the members of the group (class).
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