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Investment Funds
Home >> Glossary > Monday, September 01, 2014  


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Passive Strategy

Pay in

Pay out

Portfolio

Portfolio of minimum variance

Present Value

Price Earnings Ratio

Primary Market

Private Fixed Income

Profit and Loss Account

Profitability

Promissory Note

PROSPECTUS

Public Deficit

Purchase on Margin

Put

Passive Strategy. A money management strategy that seeks to match the return and risk characteristics of a market segment or index, by mirroring its composition. Also called passive portfolio strategy.

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Pay in. Percentage of profits reinvested in a company.

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Pay out. Percentage of profits earmarked for dividends.

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Portfolio. Group of SECURITIES held by an individual or institutional investor, which may contain a variety of common and preferred stocks, corporate and municipal bonds, certificates of deposit, and Treasury bills, that is, appropriate selections from the equity, capital and money markets. The purpose of a portfolio is to reduce risk by diversification.

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Portfolio of minimum variance. A diversified portfolio designed in such a way so as to minimize variance, that is to say eliminate the specific risk of every individual share.

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Present Value. The current value of one or more future cash payments, discounted at some appropriate interest rate.

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Price Earnings Ratio. The most common measure of how expensive a stock is. The P/E ratio is equal to a stock's market capitalization divided by its after-tax earnings over a 12-month period, usually the trailing period but occasionally the current or forward period.

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Primary Market. The market for new securities issues. In the primary market the security is purchased directly from the issuer. This differs from the secondary market.

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Private Fixed Income. Fixed income instruments issued by public or private companies, autonomous entities and official credit institutions. These instruments can also de defined as instruments not issued by the public treasury.

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Profit and Loss Account. Accounting statement of a company that reflects the income and expenses that have been accrued or incurred over a period of time. The difference between the income and the expenses determines the profit, which also appears in the said account.

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Profitability. The ability to earn a profit.

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Promissory Note. A document signed by a borrower promising to repay a loan under agreed-upon terms.

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PROSPECTUS. The official document that describes a mutual fund. It contains information required by the Securities and Exchange Commission on such subjects as the fund's investment objectives, policies, services and fees.

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Public Deficit. The amount by which a government's spending exceeds its income over a particular period of time. Also called deficit, deficit spending or budget deficit. Opposite of budget surplus.

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Purchase on Margin. Also known as a leveraged transaction. To execute a trade in which only part of the purchase price is paid in cash, while the rest is financed by way of a loan.

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Put. An option contract that gives the holder the right to sell a certain quantity of an underlying security to the writer of the option, at a specified price (strike price) up to a specified date (expiration date); here also called put option.

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