Coordinated Capital Securities, Inc. - Glossary

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P/E Ratio - Price/Earnings ratio. The price of a share of a stock divided by earnings per share, usually calculated using the latest year's earnings. The p/e ratio is also called the multiple.

Par -

The face value or principal value of a bond, usually $1,000 per bond. A bond trading at par is trading at its face value.

A preferred stock's face value, usually $100 per share. The stock's book value, liquidating value and dividend payments are based on the par value.

A common stock's stated value. It is primarily used for bookkeeping purposes and has no relationship to its market value.

Partial call - An action taken by a corporation or municipality to buy back a percentage of a specific outstanding issue.

Penny Stocks - Low priced stocks trading in the over-the-counter market. Typically refers to shares trading below one dollar a share.

Pink sheets - Daily printed listings containing quotations for thousands of over-the-counter stocks that are not listed on any of the major stock markets. These quotations are entered by dealers acting as Market Makers in the individual securities. The pink sheets are printed by the National Quotation Bureau.

Point –

In stocks, a point equals $1. If ABC shares rise 1 1/4 points, each share has risen $1.25.

In bonds, a point equals $10 since a bond is quoted as a percentage of $1,000. A bond that rises 2 1/2 points gains 2.5% of 1,000, or $25. Thus, a bond that advances from 89 to 91 1/2 means a gain in dollar value from $890 to $915.

In market averages, the point is a unit of movement in an average. It is not equivalent to any dollar value. For example, if the Dow-Jones Industrial average rises from 4236 to 4258.5, it has risen 22.5 points.

Portfolio - The combined holding of more than one stock, bond, commodity, real estate investment, or other asset by an individual or institutional investor.

Position - A market commitment. A buyer of a security is said to have a long position and, conversely, a seller of a security is said to have a short position.

Power of Attorney (POA) - Written document that permits a third party to do transactions on the behalf of the person signing the document. Depending on the specifications within the document, a power of attorney may be full or limited.

PPI - Producer Price Index. An index that shows the cost of resources needed to produce manufactured goods during the previous month.

Preferred stock - A security that usually pays a fixed dividend. Dividend payments must be made to preferred holders before common stock dividends can be paid. Preferred Stock also gives the holder a claim on corporate earnings and assets that is superior to that of holders of common stock.

Preliminary Prospectus - The first offering document printed by the company with some of the details of an IPO. The price range and number of shares to be issued is usually included in the preliminary prospectus but the terms may be changed before the final prospectus is distributed. Some lettering on the front cover is printed in red so many people refer to it as the "red herring." During presentations to potential investors, company representatives are limited to discussing only information that is contained in the current prospectus.

Premature distribution - Premature distributions are amounts withdrawn from a Traditional, SEP or SIMPLE IRA before the age of 59½. The taxable amount of the premature distribution must be included as gross income on the client's tax return. Premature distributions may be subject to penalty. See Premature Distribution Penalty below.

Premature distribution penalty - Premature distributions (sometimes called early withdrawals or early distributions) are subject to a penalty of 10% of the amount of the premature distribution. This penalty is in addition to any regular income tax. IRS Form 5329 is used to calculate the tax. It is paid directly to the IRS by the client when the annual return is filed. Premature distributions from SIMPLE IRAs taken within the first 2 years of beginning participation in the SIMPLE are subject to a 25% penalty rather than 10%. In certain circumstances, the 10% penalty does not apply to distributions even though made prior to age 59½. They include distributions for:

• Certain first-time homebuyer acquisition costs

• Certain health insurance and medical expenses

• Certain higher education expenses

• Disability

• Death

• Annuity distribution payments (substantially equal periodic payments)

Previous day's close - The previous trading day's last reported trade.

Price limit order - A customer order that specifies the price at which a trade can be executed.

Prime Rate - Interest rate charged by banks to their most credit-worthy and largest corporate customers. The prime rate is used as a base rate for other types of loans such as personal, commercial and financing. These types of loans are normally of an interest rate a few points above the prime rate.

Probate - Process whereby a decedent's will is proffered to a court and an executor is appointed to handle the settlement of the will.

Producer Price Index (PPI) - An index that shows the cost of resources needed to produce manufactured goods during the previous month.

Profit Sharing Retirement Plan - A plan that is established so that a corporation's employee may share in the company's profits. When there are profits, the corporation makes an annual contribution for each of its employees. The funds within the plan are tax deferred until withdrawn by the employee upon retirement or leaving the firm. Profit sharing plans are considered institutional investors.

Program Trading - Use of a computer-driven program by arbitrageurs and institutional traders for buying and selling baskets of 15 or more stocks. The program monitors various markets and securities and gives buy and sell signals when opportunities for profits arise or when market conditions warrant the accumulation or liquidation of a position.

Prospectus - A formal written offer to sell securities that sets forth the plan for a proposed business enterprise, or the facts concerning an existing one that an investor needs to make an informed decision.

Proxy - A written authorization by a shareholder allowing a representative to vote for or against business proposals and directors at annual meetings. The results of these votes are announced at the meeting.

Proxy statement - Material information required by the Securities and Exchange Commission to be given to a corporation's stockholders as a prerequisite to solicitation of votes. It is required for any issuer subject to the provisions of the Securities Exchange Act of 1934.

Prudent Man Rule - An investment standard used by fiduciaries as a guide for identifying acceptable investment vehicles. Some US states allow the fiduciary to invest in securities that would be bought by a prudent man of discretion and intelligence, and who looks for a reasonable income and preservation of capital. Other states require that the fiduciary only invest in a list of securities designated by the state.

Public float - The portion of a company's outstanding shares that is in the hands of public investors; shares not held by company officers, directors, or investors who hold a controlling interest in the company.

Put - An option contract that gives the holder the right, but not the obligation, to sell the underlying security at a specified price for a certain fixed period of time.

Put – bond - A put option gives the bondholder the right, under certain conditions, to redeem a bond prior to maturity and at a specified price. Some put options require placement in a "put line," until funds become available for redemption. Mortgage backed securities commonly have this put feature. As mortgages backing the issue are paid, the funds are used to redeem the bonds. Put line instructions must be sent to the Reorg department and may be sent at any time to have eligible securities placed in line for redemption. It should be understood that it may take several years for funds to be available. Put features vary among issuers. All put options have a window period (usually 4-60 days) before the redemption date, when instructions must be sent to the agent. The put option is written into the indenture clause on the bond. This clause will specify the terms of the put and the periods during which a bondholder may put the bond to the issuer.

Put option - An option that gives the option buyer the right but not the obligation to sell (go "short") the underlying futures contract at the strike price on or before the expiration date.

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