Business / Finance Glossary

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.

Pattern: A technical chart formation used to make market predictions by following the price movements of securities.

Pay-As-You-Go Basis: A method of paying income tax in which the employer deducts a portion of an employee's monthly salary to remit to the IRS.

Pay-Down: In a Treasury refunding, the amount by which the par value of the securities maturing exceeds that of those sold. In the context of general equities, paying a lower price in an accumulation . . . View Full Definition

Pay-To-Play: Attempts by municipal bond underwriting businesses to gain influence with political officials who decide which underwriters are awarded the municipality's business.

Pay-Up: The loss of cash resulting from a swap into higher-priced bonds or the need/willingness of a bank or other borrower to pay a higher rate of interest to get funds. Used in the context of gene . . . View Full Definition

Payable Through Drafts: A method of making payment that is used to maintain control over payments made on behalf of the firm by personnel in noncentral locations. The payer's bank delivers the payable through draft . . . View Full Definition

Payables: Related: Accounts payable

Payback: The length of time it takes to recover the initial cost of a project, without regard to the time value of money.

Payee: A person receiving payment through any form of money transfer method.

Payer: The person making a payment to a payee.

Paying Agent: An agent who makes principal and interest payments to bondholders on behalf of the issuer.

Payment Date: The date on which shareholders of record will be sent a check for the declared dividend.

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