Business / Finance Glossary

Purpose Statement: A form filed by a borrower that describes the use of a loan backed by securities, and guarantees that the funds lent will not be used illegally to buy securities against Federal Reserve regulations.

Put: An option granting the right to sell the underlying futures contract. Opposite of a call.

Put An Option: To exercise a put option.

Put Bond: A bond that the holder may choose either to exchange for par value at some date or to extend for a given number of years. If the price is above par, the put is a 'premium put.'

Put Guarantee Letter: A bank's letter certifying that the person writing a put option has sufficient funds in an account to cover the exercise price if required.

Put It On : Used for listed equity securities. 'Go to the floor to transact.' See: Print.

Put On: Used for listed equity securities. Trade, or cross, a block of stock at the designated price and quantity. See: Print.

Put Option: This security gives investors the right to sell (or put) a fixed number of shares at a fixed price within a given period. An investor, for example, might wish to have the right to sell share . . . View Full Definition

Put Pants On It : Used in the context of general equities. 'Elaborate on your intentions or your inquiry,' especially with respect to size, side, and price. See: Open up.

Put Price: The price at which an asset will be sold if a put option is exercised. Also called the strike or exercise price of a put option.

Put Provision: Gives the holder of a floating-rate bond the right to redeem the note at par on the coupon payment date.

Put Swaption: A financial instrument giving the buyer the right, or option, to enter into a swap as a floating-rate payer. The writer of the swaption therefore becomes the floating-rate receiver/fixed-rate payer.

Put To Seller: Exercise a put option; require that the option writer to purchase the stock at the strike price.

Put-Call Parity: Applies to derivative products. Option pricing principle that says, given a stock's price, a put and call of the same class must have a static price relationship because arbitrage opportunit . . . View Full Definition

Put-Call Parity Relationship: The relationship between the price of a put and the price of a call on the same underlying security with the same expiration date, which prevents arbitrage opportunities. Holding the underly . . . View Full Definition

Put-Call Ratio: The ratio of the volume of put options traded to the volume of call options traded, which is used as an indicator of investor sentiment (bullish or bearish).

Pyramid Scheme: An illegal, fraudulent scheme in which a con artist convinces victims to invest by promising an extraordinary return but instead simply uses newly invested funds to pay off any investors who . . . View Full Definition

Q: Fifth letter of a Nasdaq stock symbol specifying that it is in bankruptcy proceedings.

Q Ratio Or Tobins Q Ratio: Market value of a firm's assets divided by replacement value of the firm's assets. Named after James Tobin of Yale University.

Quadratic Programming: Variant of linear programming in which the objective function is quadratic rather than linear. In portfolio selection, we often minimize the variance of the portfolio (which is a quadratic f . . . View Full Definition

Qualification Period: A period of time during the first few months or weeks of a new policy when an insurance company will not reimburse a policyholder for a claim in order to allow the insurance company time to . . . View Full Definition

Qualified Endorsement: A signature on the back of a negotiable instrument transferring the amount to some other party but that includes wording that limits the endorser's liability.

Qualified Opinion: An auditor's opinion expressing certain limitations of an audit.

Qualified Plan Or Trust: A tax-deferred plan allowing employer and employee contributions that build up savings, which are paid out at retirement or on termination of employment. Tax is paid only when amounts are dr . . . View Full Definition

Qualifying Annuity: An annuity allowable as investment for a qualified plan or trust.

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