Business / Finance Glossary

Participating Convertible Preferred Stock: Preferred stock that can be converted into common stock at the option of the holder. In contrast, to the usual preferred stock, the value of the preferred stock is refunded to the holder. Th . . . View Full Definition

Participating Dividend: Dividend received from ownership of participating preferred stock.

Participating Fees: The portion of total fees in a syndicated credit that go to the participating banks.

Participating GIC: A guaranteed investment contract whose policyholder is not guaranteed a crediting rate, but instead receives a return based on the actual experience of the portfolio managed by the life insu . . . View Full Definition

Participating Life Insurance Policies: Life insurance that pays dividends to policyholders depending on the company's success as provided by few claims and profitable underwritings and investments.

Participating Preferred Stock: Preferred stock that provides the holder with a specified dividend plus the right to additional earnings under specified conditions.

Participation Certificates (PC): Used in the context of general equities. Investments representing an interest in a pool of funds or in other instruments, such as foreign securities, that allow participation in the rise or . . . View Full Definition

Participation Loan: A large loan made by a group of lenders, that enables a borrower to obtain financing above the legal lending limit of an individual lender.

Partner: Business associate who shares equity in a firm.

Partnership: Shared ownership among two or more individuals, some of whom may, but do not necessarily, have limited liability with respect to obligations of the group. See: General partnership, limited p . . . View Full Definition

Partnership Agreement: A written agreement among partners detailing the terms and conditions of participation in a business ownership arrangement.

Pass The Book: The process of transferring responsibility for a brokerage firm's trading account from one office to another around the world in order to benefit from trading 24 hours a day.

Pass-Through Coupon Rate: The interest rate paid on a securitized pool of assets, which is less than the rate paid on the underlying loans by an amount equal to the servicing and guaranteeing fees.

Pass-Through Rate: The net interest rate passed through to investors after deducting servicing, management, and guarantee fees from the gross mortgage coupon.

Pass-Through Securities: A pool of fixed income securities backed by a package of assets (i.e., mortgages) where the holder receives the principal and interest payments. Related: Mortgage pass-through security

Passive: Income or loss from business activities in which a person does not materially participate, such as a limited partnership.

Passive Activity Loss (PAL): A loss incurred in participating in passive investing.

Passive Bond: A bond without any interest yield.

Passive Income Generator (PIG): An investment that favors passive income, such as an income-oriented real estate limited partnership.

Passive Investing: Putting money into a profitable business opportunity that is deemed passive by the IRS and thus benefits from tax deductions.

Passive Investment Management: Buying a well diversified portfolio to represent a broad-based market index without attempting to search out mispriced securities.

Passive Portfolio: A market index portfolio.

Passive Portfolio Strategy: A strategy that involves minimal expectational input, and instead relies on diversification to match the performance of some market index. A passive strategy assumes that the marketplace wil . . . View Full Definition

Patent: The exclusive right to use documented intellectual property in producing or selling a particular product or using a process for a designated period of time.

Path-Dependent Option: An option whose value depends on the sequence of prices of the underlying asset rather than just the final price of the asset.

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