P, Q

Question 1

Par value

Answer 1

The stated face value of a bond or stock (as
assigned by the company’s charter)
expressed as a dollar amount per bond or
share. The par value of a common share has
little relationship to the current market
value or the amount a shareholder may
receive if the company was to be liquidated,
and so many common shares are issued
without par value. The par value of a
preferred share is significant as it indicates
the dollar amount of assets each preferred
share is entitled to should the company be
liquidated. See also Preferred share and
Principal.

Question 2

Parallel shift of the yield curve

Answer 2

An approximately equal increase or decrease
in the yields of debt securities at all
maturities. See also Yield curve, Yield
curve hump, and Yield curve twist.

Question 3

Passive investment strategy

Answer 3

An investment strategy that does not use
expectations about individual securities to
build a portfolio. The most popular passive
investment strategy is indexing. See also
Buy-and-hold, Indexing, Investment
strategy, and Active investment strategy.

Question 4

Passively managed fund

Answer 4

A managed product whose manager makes 
investment decisions based on some criteria 
other than his or her outlook for the 
markets and securities. The most common 
form of passive management is indexing. 
See also Actively managed fund.

Question 5

Peer group

Answer 5

A group of managed products (particularly
mutual funds) with a similar investment
mandate.

Question 6

Performance evaluation

Answer 6

The appraisal of a portfolio’s performance
over the evaluation period. See also
Evaluation period

Question 7

Performance fee

Answer 7

See Incentive fee

Question 8

Performance measurement

Answer 8

The calculation of the return realized by a
portfolio over the evaluation period. See
also Evaluation period.

Question 9

Periodic Cash Flow

Answer 9

A client’s income needs during retirement.

Question 10

Pioneering stage

Answer 10

The first stage of the industry life cycle.
This stage is characterized by high but
volatile growth rates.

Question 11

Planning stage

Answer 11

The first stage of the investment
management process encompassing three
steps: determine investment objectives and
constraints; create an investment policy
statement; and establish a strategic asset
allocation. See also Execution stage and
Feedback stage

Question 12

Policy return

Answer 12

The return on the portfolio based on the
strategic asset allocation decision. The
return on each asset class benchmark is
weighted by its contribution to the strategic
asset allocation.

Question 13

Pool factor

Answer 13

The percentage of original principal
remaining in a pool of mortgages backing a
mortgage-backed security. See also
Mortgage-back security

Question 14

Portfolio rebalancing

Answer 14

Rebalancing the portfolio to the long-term,
strategic asset mix. Also known as Dynamic
asset allocation

Question 15

Portfolio strategist

Answer 15

See Investment strategist.

Question 16

Portfolio turnover

Answer 16

Is roughly defined as the total value of
securities bought and sold in relation to the
overall net assets of the portfolio.

Question 17

Potential rate of growth

Answer 17

The rate at which an economy should grow
when all resources (labour and capital) are
fully utilized.

Question 18

Preferred securities

Answer 18

A type of capital security that resembles a
preferred share because it has a $25 par
value and is traded on a stock exchange. See
also Capital securities and Capital trust
security.

Question 19

Prepayment risk

Answer 19

The risk that the issuer of the bond might
prepay or redeem early some or all principal
outstanding on the loan or mortgage.

Question 20

Present value

Answer 20

A sum of money in hand, or the current
value of a sum of money that will be
received sometime in the future. See also
Future value and Time value of money.

Question 21

Price bands

Answer 21

A pair of lines graphed above and below the
price or a moving average of the price. The
lines are used to indicate support and
resistance levels. See also Bollinger bands
and Moving average envelopes.

Question 22

Price discovery

Answer 22

The process of determining the prices of
assets in the marketplace through the
interactions of buyers and sellers

Question 23

Principal

Answer 23

The amount that an issuer of debt securities
must repay to investors. This usually occurs
on the maturity date, but partial
repayments can occur prior to maturity.
Also known as the face value or par value.
See also Par value, Amortization schedule
and Maturity date.

Question 24

Principal-protected note (PPN)

Answer 24

A debt-like instrument with a maturity date
on which the issuer agrees to repay investors
the amount originally lent (the principal).
In addition to the principal, investors may
receive interest, the rate of which is tied to
the performance of an underlying asset.

Question 25

Pro cyclical indicator

Answer 25

An indicator or variable that tends to move | in tandem with the economic cycle

Question 26

Probing

Answer 26

Using statements that require the client to | respond with information.

Question 27

Producer Price Index (PPI)

Answer 27

A family of U.S. indexes that indicate price changes received by producers of goods and services

Question 28

Product differentiation

Answer 28

A barrier to entry that limits the success of a competing product or service due to a lack of brand recognition.

Question 29

Projected financial statements

Answer 29

A set of forecasted financial statements.

Question 30

Protective put

Answer 30

A long position in an underlying asset and | a long put option on the underlying asset.

Question 31

Proxy

Answer 31

``` A document that provides shareholders with information on company matters to be voted on and a form to register his or her vote. It also allows a shareholder to authorize others, usually the company’s management, to vote on behalf of the shareholder in the manner that the shareholder has indicated, without the shareholder being present ```

Question 32

Public short ratio

Answer 32

A contrarian indicator based on data published by stock exchanges. The ratio is equal to the total number of short sales of the public by the total short sales. See also Contrarian indicator.

Question 33

Purchase fund

Answer 33

An agreement in a debt security’s indenture that the issuer will set aside a specified amount of funds to retire some or all of the outstanding debt security, but only if the market price of the security is below a stated threshold, usually par. See also Sinking fund.

Question 34

Pure fundamental approach

Answer 34

A bottom-up approach to active equity investing that involves an analysis of a company’s historical and projected financial performance and valuation. See also Non-style-based approach, Pure quantitative approach, and Pure technical approach.

Question 35

Pure play

Answer 35

A reference to a commodity-producing company’s operation whose revenues are 100% dependent on the production of the raw commodity itself.

Question 36

Pure quantitative approach

Answer 36

A bottom-up approach to active equity investing that combines historical fundamental data (earnings, cash flow, book value, etc.) with statistical analysis using computer-based models to identify the best stocks according to pre-specified criteria. See also Non-style-based approach, Pure fundamental approach, and Pure technical approach.

Question 37

Pure technical approach

Answer 37

A bottom-up approach to active equity investing that assumes that all known market influences are fully reflected in market prices, and that nothing is to be gained by conducting fundamental analysis. Investment decisions are made by analyzing historical market action to determine probable future price trends. See also Non-style-based approach, Pure fundamental approach, and Pure technical approach.

Question 38

Put/call ratio

Answer 38

A contrarian indicator that compares the number of put options traded during a session with the number of call options. See also Contrarian indicator.

Question 39

Putable bond

Answer 39

See Redeemable bond.

Question 40

Quality spread theory

Answer 40

A theory that attempts to explain the behaviour of credit spreads. According to the theory, credit spreads narrow during economic upturns, and widen during economic downturns. See also Credit spread and Flight to quality.

Question 41

Quantitative analyst

Answer 41

An analyst who combines historical fundamental data with statistical analyses using computer- based models to identify the best stocks according to pre-specified criteria. See also Economist, Equity analyst, Investment strategist, and Technical analyst.

Question 42

Quartile

Answer 42

The division of mutual funds into four approximately equal-sized groups based on performance. The first or top quartile contains the funds with performance in the top quarter of all funds in the group, the second quarter contains the funds with performance in the next quarter, and so. See also Quartile ranking

Question 43

Quartile ranking

Answer 43

A method of ranking a mutual fund’s performance relative to its peer group. See also Mutual fund, Peer group, and Quartile