Terms & Definitions - P
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Par value: The principal amount, or value at maturity, of a debt obligation. It is also known as the denomination or face value. Preferred shares may also have par value, which indicates the value of assets each share would be entitled to if a company were liquidated.
Pension adjustment: An amount that reduces the allowable contribution limit to an RRSP based on the benefits earned from the employee's pension plan or deferred profit sharing plan.
Pension plan: A formal arrangement through which the employer, and in most cases the employee, contribute to a fund to provide the employee with a lifetime income after retirement.
Permanent life insurance: Life insurance coverage for which the policyholder pays an annual premium, generally for a fixed period of time or the lifetime of the insured. This type of policy features a fund (the Guaranteed Cash Surrender Value) that allows for the setting of a fixed, level premium for the life of the contract. It is often, incorrectly, referred to as a savings component, due to it's similarities, but there are significant differences.
Pooling: This is a funding method whereby the premiums and claims, for a particular benefit, are combined or pooled with those of many other groups.
Pool Adjustment: The portion of the Health and/or Dental renewal rate which represents the carrier’s pooled, or manual, rate. This is the non-credible portion of the premium rate.
Pool Credibility: The amount of the pool adjustment that will be used in the determination of the Health and/or renewal rates. It is expressed as a percentage and calculated as the Experience Credibility.
Portfolio: The total of an individual's investments, including stocks, bonds, GICs, cash, etc.
Preferred shares: Preferred shares usually have a prior claim over common shares to the assets of the corporation. They pay dividends at specific rates and these must be paid before any dividends are paid on common shares. Preferred shares are usually bought for dividend income while common shares are bought for capital growth.
Premium: 1) The amounts paid to keep an insurance policy in force. 2) The amount by which a bond's selling price exceeds its face value.
Prescribed annuity: A prescribed annuity can only be purchased with non-registered funds - the money cannot come from an RRSP. Payments consist of principal and interest, and only the interest portion received during a calendar year is taxable. This effectively spreads the tax impact out over the life of the contract by keeping the taxable portion - the interest - at the same level throughout the life of the annuity. It can make sense at times to use such an annuity in combination with a RRIF
Present value: The amount of money that, if invested at today's interest rates, would grow to a future amount in a specific time period.
Price earnings ratio: The market price of a common share divided by its earnings per share for 12 months.
Primary distribution: A new security issue, or one that is made available to investors for the first time.
Prime rate: The lowest interest rate charged by chartered banks at a given time. Usually this rate is available only to a bank's largest customers. The prime rate is used as the basis for all other lending rates, including consumer loans, mortgages, and business loans.
Principal: The person for whom a broker executes an order, or a dealer buying or selling for his or her own account. Also, an individual's capital or the face amount of a bond.
Prospectus: The document by which a corporation or other legal entity offers a new issue of securities to the public.
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