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Price Earnings Ratio
(P/E Ratio) |
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A valuation ratio of a company's
current share price compared to its per-share earnings.
Calculated as : Market Value per Share Earnings
per Share (EPS) EPS is usually from the last four
quarters (trailing P/E), but sometimes can be taken
from the estimates of earnings expected in the next
four quarters (projected or forward P/E). A third
variation is the sum of the last two actual quarters
and the estimates of the next two quarters. Sometimes
the P/E is referred to as the "multiple,"
because it s hows how much investors are willing
to pay per dollar of earnings. In general, a high
P/E means high projected earnings in the future.
However, the P/E ratio actually doesn't tell us
a whole lot by itself. It's usually only useful
to compare the P/E ratios of companies in the same
industry, or to the market in general, or against
the company's own historical P/E. |
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Private
Placement / Private Equity |
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When
equity capital is made available to companies or
investors, but not quoted on a stock market. |
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The funds raised through private
equity can be used to develop new products and technologies,
to expand working capital, to make acquisitions, or to
strengthen a company's balance sheet. The average individual
investor will not have access to private equity because
it requires a very large investment. The result is the
sale of securities to a relatively small number of investors.
Private placements do not have to be registered with organizations
such as the FSA, SEC because no public offering is involved. |
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Proprietary Trading |
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When
a firm trades for direct gain instead of commission dollars
. Essentially, the firm has decided to profit from the
market rather than commissions from processing trades.
Firms who engage in proprietary trading believe they have
a competitive advantage that will enable them to earn
excess returns. |
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Prospectus |
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In the case of mutual funds, a
prospectus describes the fund's objectives, history, manager
background, and financial statements. A prospectus makes
investors aware of the risks of an investment and in most
jurisdictions is required to be published by law. |
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Put Option |
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An option giving the holder the
right, but not the obligation, to sell a specific quantity
of an asset for a
fixed price during a specific period. |
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