Glossary P

Section P

PAC (Planned Amortization Class) Tranche

A CMO tranche that uses a mechanism similar to a sinking fund to determine a fixed principal payment schedule that will apply over a range of prepayment assumptions. The effect of the prepayment variability that is removed from a PAC bond is transferred to a companion tranche.


A price equal to the original face amount of a security, as distinct from its market value. On a debt security, the par or face value is the amount the investor has been promised to receive from the issuer at maturity.

Pari Pasu

Term of an indenture mandating all unsecured creditors be ranked equally.

Paying Agent

Place where principal and interest are payable. Usually a designated bank or the office of the treasurer of the issuer.

Payment Cap

A limit on the amount your monthly payments on an adjustable rate mortgage can increase during each adjustment period. Unlike an interest rate cap, a payment cap does not limit the amount of interest you pay, and could lead to negative amortization.

PCR Pollution Control Revenue bonds

A type of multi-family housing revenue bond, Public Housing Authority Bonds are issued by a local public housing authority to finance public housing. Backed by the solemn pledge of the U.S. Government to see that the payments are made in full, these bonds are no longer issued.

Penny Stocks

Low priced securities, often highly speculative, that generally sell for less than $5 per share, and are not traded on NASDAQ or any national securities exchange.

Pink Sheets

A listing of OTC stocks and the dealers who offer quotes for such stocks, that are published daily on pink paper.

PITI -An abbreviation for "Principal, Interest, Taxes and Insurance"

The four charges that make up your monthly mortgage payment.

Portfolio Composition

A percentage breakdown of securities holdings in several specified categories.

Precious Metals Funds

A mutual fund that seeks capital appreciation by investing primarily in equity securities of companies involved in mining, distribution, processing, or dealing in gold, silver, platinum, diamonds, or other precious metals and minerals.


Securities are pre-refunded when the proceeds of a new bond issue are used to repay an outstanding bond issue on the first call date. Generally, the proceeds of the new bond issue are investment in government securities, which are placed in escrow. The interest and principal repayments on these securities are then used to repay to old issue on the first call date. The first call date is the effective maturity.

Preferred Stock

A class of stock with a claim on the company's earnings before payment may be made on the common stock and usually entitled to priority over common stock if the company liquidates.

Preliminary Pricing

The tentative offering terms on a bond issue. All details of an issue are subject to change after the order period has expired.

Prepayment Penalty

An amount charged by a lender when you make a prepayment to pay the loan in full before the final term. Not all loan programs have a prepayment penalty.

Priced to Call

A bond whose dollar price has been calculated to the call, rather than to maturity.

Price/Earnings Ratio

A popular way to compare stocks selling at various price levels. The P-E ratio is the current price of a share of stock divided by earnings per share for a twelve-month period. For example, a stock selling for $50 per share and earning $5 per share is said to be selling at a P-E ratio of 10.

Price-to-Book Ratio

A company's capitalization divided by its book value (accounting value listed on balance sheet).

Primary Mortgage Market

Lenders who make mortgage loans available directly to borrowers. UBS Bank USA is a primary lender, as are many savings and loan associations and commercial banks. Primary lenders frequently sell their mortgages in the secondary mortgage market, which includes Fannie Mae and Ginnie Mae.

Principal & Interest (P&I)

The two charges that make up your monthly mortgage payment. Principal is the outstanding balance of your loan, and interest is the finance charge on that amount.


"Orders for new issue bonds are grouped according to type, and then are assigned different levels of priority, based on the benefit to the members of the syndicate. (The highest priority order is that which benefits the most number of syndicate members.) Ideally, orders are generally filled in descending levels of priority, and pro rata within each priority group. The priority levels may change from issue to issue, but will be disclosed by the Senior Manager before the Order Period begins. The usual levels of priority-in descending rank-are:

  • Group Net--The bonds are sold at the public offering price (called 'net price') and the members in the syndicate share in the spread of the trade on a pro rata basis.
  • Net Designated--The bonds are sold at the net, but the purchaser decides which of the firms in the syndicate will be paid the spread from the trade.
  • Member Order-The bonds are sold to a member of the syndicate at the net price less the takedown. Only one firm earns the spread from a member order, hence Member Orders have the lowest priority.
    See also Allocation, Selling Group Member,and Senior Manager."

Private Label

The term used to describe a mortgage security whose issuer is an entity other than a U.S. government agency or U.S. government-sponsored enterprise. Such issuers may be subsidiaries of investment banks, financial institutions, or home builders.

Private Mortgage Insurance (PMI)

A policy that guarantees payment of a conventional mortgage loan in case of default. Usually required if your down payment is less than 20 percent of the home's price.

Private (Financing) Placement

Raising of capital for a business venture via private rather than public placement, resulting in the sale of securities to a relatively few number of investors. Such investments do not have to be registered with the SEC because no public offering is involved.

Proxy Statement

Information given to stockholders in conjunction with the solicitation of proxies.


The Permanent School Fund was endowed by the 1854 Texas Constitution and given certain public land and income by the 1876 Texas Constitution. Additional lands have been granted over the years. The Texas PSF guarantees only voter-approved long term bonds issued by accredited school districts in Texas. As of 1997, the PSF had a market value of $15.5 billion and book value of $10.6 billion. The PSF guarantee is rated Triple-A (The highest rating available) by Moody's, S&P and Fitch.


The Permanent University Fund was created in the 1876 Texas Constitution to provide an endowment for the University of Texas System and Texas A&M University System. The income generated by the fund flows to the two university systems. As of 1996, the PUF had a market value of $5.3 billion and book value of $4.6 billion. The PUF guarantee is rated Triple-A by Moody's and S&P.

Put Feature

A put is an option to the holder of a bond to "put or tender, the bond to an issuer (or trustee or tender agent) and demand purchase of the bond at the stated time before maturity, or upon the occurrence of particular circumstances. The put date is the effective maturity date.