Pac - Man Strategy
This is a defensive strategy used to defeat a hostile takeover bid where the target corporation begins buying the shares of the acquirer corporation or threatens to do so.

Participation Certificate
This is an interest in a single loan or a pool of loans evidenced by a written agreement or certificate.

Payment in Kind Securities
These are securities that pay their holders with more of the same type of security instead of cash. For example, bond holders will receive more bonds instead of cash payments.

Penny Stock
Penny Stocks are common shares of public companies that trade for under one dollar. They are generally thinly traded and are often targets for price manipulation.

Performance Stocks
A performance stock is also called a Growth Stock. These are stocks of fast growing companies that usually pay no dividends. All profits are reinvested in the company in order to help finance its growth. These companies generally take higher than average risks.

PIK Securities
See Payment in Kind Securities.

Pink Sheets
Pink Sheets LLC, formerly the National Quotation Bureau, provides daily bid and offer quotes, electronically, from Market Makers on unlisted, OTC Stocks (pink sheets) and bonds (yellow sheets) to subscribers of the service. It is not a stock exchange.

Preemptive Right
This is a right usually set forth in a shareholders Agreement or Articles of Incorporation giving existing owners of corporate stock the right or opportunity to purchase shares of new issues before it is offered to others. The purpose is to protect shareholders from dilution of value and control.

Price Earning Ratio (P / E Ratio)
This is the price of a stock divided by its earnings per share. The P / E Ratio is also known as the multiple or Earnings Multiple. It is a measure of price paid for a share relative to the annual net income or profit earned by the corporation per share.

Prime Rate
This is the rate that commercial banks charge their most credit worthy borrowers. It is also a base rate, from which other interest rates are calculated. For example, one borrower may be charged prime plus 1%, another prime plus 2%, etc. Every bank has its own prime rate, although the prime rate at most major banks, is the same or very close to the same. Smaller banks may have a prime rate that is higher than major bank prime.

Principal Shareholder
Under SEC Rules, a Principal Shareholder owns 10% or more of the voting stock of a Registered Company.

Private Equity Fund
Generally, a limited partnership controlled by a private equity firm that acts as the general partner. The Private Equity Fund (General Partner) usually solicits investment funds from Accredited Investors and Qualified Institutional Investors for investment into various ventures.

Private Limited Partnership (PLP)
This is a limited partnership that is not registered with the SEC.

Pro Forma
Projected financial results for a business.

Pro Forma Budget
A projected or hypothetical budget used for planning purposes.

Proprietorship or Sole Proprietorship
This is an unincorporated business owned by one person. The individual proprietor is entitled to all profits and is responsible for all expenses and liabilities. A Proprietorship offers the owner no asset protection.

Prospectus
The formal written offer to sell securities that sets forth the business plan of the enterprise and all relevant information the investor will need to make an informed decision to pay or not buy the securities.

Quick Ratio
Cash, marketable securities, and accounts receivable divided by current liabilities. This ratio excludes inventory, thus concentrating on the companies most liquid assets. It provides an answer to the question: If sales declined materially or stopped, could the company still meet its obligation? A Quick Ratio of 1:1 is considered acceptable. This is also referred to as the Acid Test Ratio.