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PE Ratio

An abbreviation for Price to Earnings Ratio. This ratio, which divides the share price by earnings per share, provides a simplistic valuation tool for investors. As a rule of thumb, the higher the P/E ratio, the more expensive the company, hence the reason why “value” investors focus on buying companies with low P/E ratios.

PIEs

A portfolio investment entity (PIE) is a new type of entity (such as a managed fund) that invests the contributions from investors in different types of investments.

Payout Ratio

The percentage of after tax profits paid out to shareholders as dividends.

Par

A bond at par is one whose price is the same as its face value.

Passive Management

Investing in a managed fund (other pooled investment) that attempts to match the risk/return pattern of a market index.

Perpetual Note Bond

A bond with no fixed maturity date.

Premium

When the price of a bond/share exceeds its face value.

Principal

The face value of a bond.

Preference Shares

Shares that entitle the shareholder to first claim on the profits of a company when it comes to dividend payments and which hold priority over ordinary shares for repayment of capital in the event that the company is liquidated. Preference shares rank below creditors and debenture holders and often carry no entitlement to vote at general meetings except under special circumstances.

Personalised Service

Personalised service is service provided to clients who are known and are readily identifiable by the Adviser, and either the Adviser has taken the person’s individual financial situation into account, or the client would expect their individual situation to be taken into account. The individual’s financial situation includes their financial needs, financial goals and tolerance for risk. Source: www.fma.govt.nz

Portfolio

A collection of securities and/or other financial instruments (investments) held by an institution or private individual.

Option

The right to buy or sell a commodity or security at an agreed price during a given period of time.

Maturity Date

The date at which a fixed interest security matures.

Minimum Holding

The minimum amount of shares/bonds an individual must hold.

Market Timing

Switching out of, or into, shares or bonds according to one’s forecast of how the markets will do in the short run.

Market Price

The prevailing price of shares traded on the appropriate stock exchange (e.g. NZX). May be the last price at which the shares traded, or the most recent price offered or bid for the shares.

Market Risk

Market risk is risk inherent in the whole market, often called systemic risk or non-diversifiable risk. It is the risk at collapse of an entire system, not any one individual entity or company.

Net Asset Value

The value of a companies assets less the value of its liabilities. The total assets (securities, cash, and accrued earnings) of a company or fund minus any liabilities, usually expressed on a per share basis (and therefore divided by the number of units outstanding).

Nominal Value

The face value of a bond.

Offer

Is the price or yield of securities to be sold.