Glossary of Terms

Price to earnings ratio.

A weighted index using quantities entirely from the current year's data.

(PE-ACH). A facilitator for low-value electronic payments across Europe. The EBA’s STEP2 was the first PE-ACH to be introduced. The development of the pan-European direct debit will be the next phase.

Credit transfers that do not involve the exchange of paper documents between banks. Other credit transfers are referred to as being paper-based.

1. The face value of an interest bearing instrument. A bond whose market yield is equal to its coupon rate trades in the market at a value of par (= the face value).

2. The value of an ordinary share (or a unit of common stock) for legal purposes.

A bond redeemable at par which is currently trading at a market price equal to its par value.
The current market yield on the par bond is therefore equal to its coupon rate.

Same as Par yield.

See Par.

Today’s market yield on a coupon bond trading at par and redeemable at par = the fixed coupon rate payable on such a ‘par bond’.
Also known as Par rate, Swap rate or Swap yield.

A parent company (investing company) controls a subsidiary.

An undertaking is a parent undertaking in relation to another undertaking if it controls that undertaking in one or more ways defined in companies legislation.

Latin term meaning ‘equal in all respects’ and would indicate, for example, that one class of obligation will have the same rights and privileges as another class of obligation.

A clause in a loan agreement, normally for an unsecured borrowing, that the lender will rank equally with all other unsecured creditors.

VAT. A situation where a trader makes both taxable and exempt supplies and consequently may not be able to recover all the input VAT.

Tax. A situation where the entire proceeds on the sale of the original asset are not re-invested.

A party which participates in a transfer system. This generic term refers to an institution which is identified by a transfer system (for example by a bank identification number) and is allowed to send payment orders directly to the system or which is directly bound by the rules governing that transfer system.

Accounting. In connection with the definition of 'parent' and 'subsidiary undertakings' a participating interest is an interest held by an undertaking in the shares of another undertaking which it holds on a long-term basis for the purpose of securing a contribution to its activities by the exercise of control on influence arising from that interest.

Law. A partnership exists where two or more individuals enter into business together.

Law. A common law tort which can be used to enforce unregistered trademark rights. In essence, the action is designed to prevent others from trading on the reputation or goodwill of an existing trademark or brand.

Tax. Income derived from real estate and business investments in which the taxpayer is not actively involved.

Pensions accounting.
The increase in the present value of pension scheme liabilities - related to employee service in prior periods - arising in the current period and resulting from the introduction of, or improvement to, retirement benefits.

Pension scheme liabilities relating to service completed up to the Valuation date.

Government grant of the exclusive privilege of making or selling a new invention, design or process for a predetermined number of years.

To discharge a debt by giving or doing something. More specifically to give money in return for goods or services.

(PAYE). The system used in the UK to collect income tax and national insurance contributions from employees.

(PAYG). A pension arrangement under which benefits are paid out of revenues and no funding is set aside to meet future liabilities.

(PTD). A draft that is only payable via a nominated bank. Depending on the conditions attached to the draft, the nominated bank may be the paying bank or only act as the collecting bank that presents the draft for payment.

Accounting. Amounts which are due to be paid by a reporting entity.

A policy of paying suppliers late reduces the amount of financing required from other sources, but this could increase the risk of penalty charges for late payment and will also inconvenience suppliers with whom a good relationship is important.

Effective payables management involves - among other things - finding an appropriately balanced level of payables.

A method of investment appraisal in which the cumulative total of investment (one or more outflows - negative amounts) and return (inflows - positive amounts) is projected in order to determine when that total is zero. This is the time when the initial investment has been fully recovered. Normally there is no attempt to adjust money received in different time periods. The underlying assumption is that the sooner you can 'get your money back' the better the project. This is - of course - very simplistic, and it may lead to suboptimal decisions.

A slightly more sophisticated version of payback analysis is Discounted payback.

The same as payback analysis.

An abbreviation of Pay As You Earn.

The party to which a cheque is made payable.

Pay as you go.

An institution, a company or a bank which, on behalf of the issuing company, makes interest payments and repayment of the principal upon presentation of coupon and/or bond certificates.

The payor’s transfer of a monetary claim on a party acceptable to the payee. Typically, claims take the form of banknotes or deposit balances held at a financial institution or at a central bank.

A group of banks working together to provide collectively co-ordinated and/or cross-border cash management services.

The time interval between the receipt of an invoice by the payor, including the credit period, and the time the payor’s bank account is charged for funds in payment of the invoice. May also be quantified and expressed in cash amounts.

A form of netting, involving payment instructions in the same currency and with the same due date, where the party with the largest aggregate balance settles the difference resulting from the netting operation. Also called settlement netting.

An order or message requesting the transfer of funds (in the form of a monetary claim on a party) to the order of the payee. The order may relate either to a credit transfer or to a debit transfer.

A payment system consists of a set of instruments, banking procedures and, typically, interbank funds transfer systems that facilitate the circulation of money.

(PVP). A mechanism in a foreign exchange settlement system which ensures that a final transfer of one currency occurs if and only if a final transfer of the other currency or currencies takes place.

1. In relation to an option, the terminal cashflow.

2. The gain or loss resulting from a strategy, excluding sunk costs.

3. The net gain or loss from a strategy, including any front-end payment or receipt.

The party that issues a cheque.

US Pension Benefit Guaranty Corporation.

Profit Before Interest and Tax.
A measure of the operating profitability of a business, before taking account of the effects of either
i. the chosen capital structure or
ii. taxation.

The purpose of the measure being to facilitate comparability of underlying businesses.

Pensions. Projected Benefit Obligation.

Abbreviation for Public Company Accounting Oversight Board.

Profits Chargeable to Corporation Tax.

Price to earnings ratio.

Abbreviation for Pan-European Automated Clearing House.

Statistics. Three times the difference between the mean and the median all divided by the standard deviation.

An enquiry commissioned by the UK government in 2001 into the circumstances leading to the financial difficulties encountered by the Equitable Life Assurance Company. Lord Penrose, who undertook the enquiry, submitted his report in 2003. It is available for download at the Treasury website.

A periodic payment made to a Pensioner under a pension scheme. In some countries, such as Australia, the term can alternatively be applied to a lump sum payment on retirement.

1. The stock of assets held by a funded pension scheme, from which to pay the related pension liabilities.

2. The entitlement enjoyed by an individual to receive a pension or other related benefit.

3. Any other asset relating to a pension scheme. For example, a right to a proportionate share of a pension fund surplus, or a related benefit of enjoying a pension contributions holiday.

(PBGC). US pensions. An organisation set up by the US government to take over the assets and liabilities of insolvent pension funds and to provide limited guarantees as to the payment of pensions by those funds. The PBGC has wide powers to investigate US pension schemes and their sponsoring companies. The equivalent in the UK is the Pension Protection Fund.

The accounting cost to a company of providing pension benefits in a given time period as shown in the financial statements, which may be more or less than actual payments made into the scheme or schemes involved over the same period.

The fraction of pensionable salary for each year of pensionable service which forms the basis for a pension in a Defined Benefit pension scheme.

1. In strict terms, the stock of assets held by a funded pension scheme.

2. A synonym for the funded pension scheme itself.

1. In relation to a defined benefit pension scheme, the expected future amounts of pensions, other benefits and related costs payable by the scheme.

2. The total present value of these expected future cash outflows from the pension scheme.

Same as Pension scheme.

(PPF). An organisation set up by the UK government under the Pensions Act 2004 to fulfil a similar purpose in the UK to that undertaken by the PBGC in the US.

An individual appointed under the UK Pensions Act 2004 to investigate any matters considered by the Board of the PPF, including complaints of maladministration and matters of law.

Same as pensions risk.

Any type of arrangement whereby members of the scheme become entitled to receive a Pension. Also known as a pension plan.

Pensions. A forerunner of the IRSPSS.

(PSR). The UK organisation set up under the Social Security Act 1990 to collect details on all occupational pension schemes and to collect levies to cover running costs of the Pensions Regulator, the Pensions Ombudsman, OPAS and itself.

The salary to which the pay related formula in a Defined Benefit pension scheme is applied. Pensionable salary will often be lower than total salary as a result of certain deductions (to exclude for example any overtime or bonus payments).

The period of service in years that is taken into account when calculating the benefits payable under a Defined Benefit pension scheme.

Someone who receives a pension under a pension scheme.

Key UK legislation relating to pensions includes the Pensions Act 2004 and the Pensions Act 1995.

A fund set up under the UK Pensions Act 1995 providing assistance in the payment of benefits cases where an employer is insolvent, assets are less than 90% of liabilities and there has been a loss of scheme assets as a result of dishonesty. Compensation is funded by levies raised by the Pension Scheme Registry on an as required basis.

(PMI). A body set up in the UK to promote professionalism among those involved with pensions, including the provision of qualifications for practitioners.

An individual appointed under the UK Social Security Act 1990 empowered to investigate disputes between individual members of occupational pension schemes and the trustees or administrators of those schemes.

An educational charity providing non-political, independent comment and analysis on pension policy in the UK.

A body appointed under the UK Pensions Act 2004 with the objectives of working proactively to protect pension benefits, reducing the risk of claims on the PPF and promoting the good administration of pension schemes. The Pensions Regulator took on all of the duties of OPRA in 2005.

(PRAG). An independent research and discussion group for the development and exchange of ideas in the field primarily of pension scheme accounting and also in accounting for pensions within sponsoring company accounts.

The risk of adverse effects on an organisation (usually an employer) resulting from its obligations to provide (or contribute towards) retirement benefits.

Price to earnings ratio (or 'price-earnings ratio').

Law. Latin phrase meaning through the want of care. A decision per incuriam is one which a subsequent court finds to be a mistake, and therefore not of binding precedent.

Division of a frequency distribution into 100 equal parts.

A market form, characterised by many sellers, selling a homogenous product.

Similar to an Efficient market.

See Efficient market hypothesis.

A bond is an instrument issued by a bank or an insurance company, in favour of a buyer, on behalf of a supplier, as additional assurance to the buyer that the supplier will perform its obligations under the supply contract. Such a bank bond or insurance company bond will be supported by an indemnity issued by the supplier in favour of the bank or insurance company.

A performance bond can be called by the buyer in the event of any contract delays or defects in the supplier's performance of the contract.

The difference between the actual rate of return on invested capital and the required market rate of return.

Financial reporting. A period for which a company prepares a set of statutory accounts.

Abbreviation for periodic rate of interest.

The total interest for any given period - for example 0.014% per day.

Not to be confused with the effective annual rate and the nominal annual rate, which are different.

The informal, shortened version of perquisite which is a benefit arising as a result of employment in addition to regular remuneration. Perks are seen by some as privileges often expected historically by certain senior employees such as a company car, private health insurance, executive dining room.

Tax. A permanent place of trade for an organisation. Important for determining which country taxes its income.

A bond which pays periodic coupons in perpetuity, but never repays the principal. Also known as an Irredeemable bond.

A perpetuity is similar to an annuity except that the fixed periodic cash flow which starts at the future Time 1 then carries on for ever (‘in perpetuity’) rather than stopping after Time n. The present value of a fixed perpetuity is calculated as:

Present Value = A₁ x 1/r

For a growing perpetuity the present value formula is modified to take account of the constant periodic growth rate from Time 1 to infinity as:

Present Value = A₁ x 1/[r-g]

where g = the rate of growth of the cash flow.

The fraction 1/r used when evaluating a fixed perpetuity.

Usually shortened to perk, which is the more common usage.

(PIN). A sequence of alphanumeric/numeric characters that identifies someone accessing an electronic information system.

Written application to a court requesting a remedy available under law.

The amount of cash that an organisation keeps in notes or coins on its premises to pay small items of expense. This is to be distinguished from cash which normally refers to amounts held in banks. Petty cash transactions are normally recorded in a petty cash book, the balance of which should agree with the amounts of petty cash held at any given time.

Germany. Mortgage bond issued by German mortgage banks. The strict regulatory regime governing Pfandbrief-issuing and their relatively high credit ratings have enabled issuers to sell them widely to international investors.

1. A diagram illustrating the inverse relationship between (general) inflation and unemployment, or the inverse relationship itself.

2. A diagram illustrating the inverse relationship between wages (or wage inflation) and unemployment, or the inverse relationship itself.

Where a firm is put into administration to avoid losses and get out of contracts before the profitable portion is subsequently bought back.

1. In relation to derivative financial instruments, the physical is the underlying asset to which an option (or other derivative instrument) relates.

2. Having a tangible existence, such as machinery. (Contrasted with intangible rights or other assets, such as goodwill.)

Profitability Index.

A visual representation using a number of symbols to indicate a particular quantity.

A circle which represents the whole amount and containing wedge-shaped sectors which indicate the fraction in each category. (Resembling a pie.)

Abbreviation for Personal Identification Number.

Abbreviation for Public Key Infrastructure.

The issue of securities to an institutional buyer for cash. Often, a placing is used as a means of issuing securities.

A description meaning that there are no additional non-standard features in a financial contract. For example, a plain vanilla interest rate swap is a standardised agreement to exchange fixed for floating interest flows, calculated on a fixed notional principal amount over the life of the swap.

The term derives from ice cream, where 'plain vanilla' ice cream was historically the commonest and cheapest variety.

Pensions Management Institute.

Tax and pensions. Practice Note.

Professional Oversight Body for Accounting.

A chart in the form of series of 'x's and 'o's, representing rising and falling market prices, independent of time.

(POS). The use of payment cards at a retail location (point of sale). The relevant payment information is captured either by paper vouchers or by electronic terminals. Increasingly, the latter can also transmit the information; this process is called ‘electronic funds transfer at the point of sale’ (EFTPOS).

A discrete probability distribution that gives the expected frequency of occurrence of certain type of random events.

The risk of adverse consequences arising from the actions of governments or of governmental agencies.

1.A procedure in which excess funds in the bank accounts of a company or its subsidiaries are used to offset deficits in other company accounts for the purpose of determining interest earned or owed.

2. The core principle of fund management, where individual investors with the same investment objective bring their moneys together in a single investment vehicle portfolio. In exchange for the moneys brought in, the investor receives a proportional share in the mutual fund’s underlying assets.

The set of all possible items.

A number of different assets, liabilities, or assets and liabilities together, considered as a whole.
For example, a diversified investment portfolio. An investor in such a portfolio might hold a number of different investment assets within the portfolio, with the objectives of growing the total value of the portfolio and limiting the risk of losses.

Portfolio analysis is the analysis of combinations of assets and liabilities. Portfolio analysis takes into account the expected correlations of the values of - and returns on - the different components of the portfolio.

A portfolio is said to be immunized if its value at the end of the holding period is the value predicted at the start, regardless of the movement of interest rates in between. We can achieve immunization by holding a portfolio whose duration is equal to the intended holding period. For example, a zero coupon bond of maturity = holding period. We can also immunize an existing portfolio by adding other appropriate instruments to it to achieve the required portfolio duration = intended holding period.

1. In dealing, the net holding or exposure in a given market instrument, or to a particular market rate.

2. In statistics, a measure of the central location of a frequency distribution.

3. More generally, any relevant aspect of a location or situation.

Also called advisory netting. The netting of instructions relating to obligations between two or more parties, as a result of which neither satisfies nor discharges those original individual obligations. This is also referred to as payment netting in the case of payment orders.

Risk management. A type of options hedging structure in which the net premium payable by the hedger is positive.

A straight line relationship; the forecast or other dependent variable increases as the independent variable increases.

Banking. Also known as match pay, a service used to combat cheque fraud. The bank pays only those cheques with serial numbers and cash amounts that match those in an issue file supplied by the company.

Statements of fact, which are capable of proof or disproof.

A yield curve demonstrating short-term rates which are lower than long-term rates.

Accounting. A significant event which occurs between a company's balance sheet date and the date on which the company's financial statements are approved by the directors. Such events are classified for accounting purposes as being either adjusting events or non-adjusting events.

Pension Protection Fund.

Producer Price Index.

(PN). Tax and pensions. A document issued by HMRC, for example in connection with the granting of Exempt Approved Status, not having the force of law.

A portion of the management fee retained by the arranging or lead managing bank as compensation for its coordinating role in a syndicated credit or bond issue.

Pensions Research Accounting Group.

The rights of a shareholder to have the first refusal on any new shares in the company as they become available. In the UK these rights are enshrined in company law (Section 561 of the Companies Act 2006, formerly Section 89 of the Companies Act 1985).

Outside the UK pre-emption rights may or may not be recognised in law.

Pre-settlement risk is the risk that one party to a contract becomes insolvent before delivering its side of the contract. For treasurers it is vital that hedging counterparties remain solvent for the duration of the hedging contract – otherwise the hedge evaporates. A similar risk occurs in commercial contracts. Customers may become insolvent before paying for goods, and supplier insolvency may threaten production schedules.

The same as Contingent risk as applied to currency management.

A desire to hold money in case of unforeseen emergencies.

The process whereby a decision is taken in a certain way because a previous decision was taken that way. In relation to law, a previously decided case which, it is argued, should cause another case to be decided the same way.

A form of capital with preferred rights over ordinary shares or common stock. These rights may be a preferred right to a dividend or to repayment in the event of winding up of the business. This form of capital can have some characteristics of debt and of equity. As such they could be a form of hybrid instrument. Preference shares are frequently used by venture capital investors as a medium for their investment.

A creditor who is entitled to receive certain payments in priority to other unsecured creditors.

Stock that is issued with a stated dividend that must be paid before dividends to common stock holders. Preferred stock does not usually have voting rights.

The process whereby a national court with a case including a question of the validity or interpretation of community law can (or if it is a final court of appeal, must) refer that specific question to the European Court of Justice for a binding determination.

1. The amount payable by the buyer of an option to the option writer for the right to deal on the terms contained in the option.

2. The amount payable by an insured to the insurer in return for the protection set out in the terms of the insurance policy.

3. A bond trading in the market at a premium has a market value greater than its par value.

4. A foreign currency trading at a premium in the forward foreign exchange market is stronger in the forward market, than in the spot market.

A card which contains real purchasing power, for which the customer pays the issuer of the card in advance.

Accounting. Amounts owing to the business as a result of paying in advance for services. A prepayment is a form of asset, because it represents benefits (in the form of valuable services) that the business is entitled to receive in the future, in consideration for cash that the business has already paid out.

(PV). Today’s fair value of a future cash flow, calculated by discounting the future cash flow at the current market cost of capital.

The act of presenting a negotiable instrument to the person on whom it is drawn for acceptance or payment.

Economics. The percentage change in quantity demanded divided by the percentage change in price.

Economics. The percentage change in quantity supplied divided by the percentage change in price.

Pensions. The linking of pensions in payment to a price index, such as Retail Price Inflation (RPI) in the UK.

Price risk is the risk that the value of an investment that you own will fall.
This risk illustrates how risks interact, as price risk could be caused by some or all of:
• Interest rate risk – interest rate fluctuations affect the value of instruments which pay fixed interest.
• Credit risk – the asset is worth less because the issuer’s credit standing has weakened.
• Market liquidity risk – the market is only willing to buy the asset at a lower price (if at all).

Price risk shows how risks can be bundled up into a single term in some applications, and how important it is that the treasurer understands how risks originate.
Although a single term can be useful when considering an asset or liability class, it can also confuse. The terminology tends to be driven by symptoms rather than causes, and a risk management strategy should really be driven by the latter.

A firm or other market participant which is unable to influence price.

(PER). Current share price ÷ Earnings per share.

Also known as price earnings ratio.
Sometimes written as P/E ratio or PE ratio.

The expected money amount of the change in price of an instrument, following a one basis point 0.01% change in nominal annual yield (= 0.0001 as a decimal).

Calculated as:
PVBP = Modified duration x Price x 0.0001

Also known as the Dollar value of a basis point.
Commonly abbreviated as PVBP, PV01, DVBP or DV01.

A clause in a loan document which links the pricing of the borrowing to the credit rating of the borrower.

UK National Insurance contributions paid by employees.

A market for financial assets when those assets are first offered for sale. For example on the flotation of a company or the issue of a bond.

Financial reporting. Under IAS the main accounting statements required to be presented. These are:
• Statement of financial position
• Income statement (which can be included in the statement of comprehensive income)
• Statement of comprehensive income
• Statement of changes in equity
• Statement of cash flows

The primary statements are supported by Notes providing additional and more detailed financial information.

A bank which is considered to be very highly credit-worthy, so that it presents a very low credit risk.

The interest rate banks charge their most creditworthy customers.

1. An individual or other legal person represented by an agent.

2. The amount of an investment or a loan, excluding any interest.

3. The reference amount of a traded financial instrument, used to determine its future cashflows.

Pensions. For pension schemes where there is more than one employer (for example a holding company and certain of its subsidiaries), that employer in which is vested special powers or duties, such as the appointment of trustees.

The amount stated on the face of a security, exclusive of interest or premium. The amount is that used in the computation of interest due on the security.

Accounting. Adjustments to previous year's accounts caused by changes in accounting policies or where fundamental errors do not allow the accounts to give a true and fair view.

The term used for legislation that originates from a particular member of Parliament or from a member of the public. It affects a particular person, organisation, or locality as distinguished from all the public generally.

Private companies are not allowed to offer their shares for sale to the public. For this reason, private companies are subject to lighter regulation and reporting requirements, compared with public companies.

The part of the national law of a country that establishes rules for dealing with cases involving a foreign element.

This is a form of securities issuance that has no exact definition. It usually refers to an issue that has been designed for a specific set of investor needs at a particular time. As such it is not expected to be traded in the secondary market and is not a 'public' issue. It is not normally expected to be listed on an exchange.

A legal concept relevant to contracts, particularly to contracts for the sale of goods or services, which provides that only the parties to the contract have rights and obligations under it.

The study of chance providing an objective measure of uncertainty.

Probabilities range between 1 (=100%) and 0 (=0%). A probability of 100% means that an event is considered certain to occur. A probability of 0% means that an event is considered certain not to occur. Tossing an unbiased coin, the probability of getting a head is 50%.

A costing system whereby costs are accumulated for each separate process or operation for a period of time, and then averaged by dividing the total cumulative costs for the period by a measure of the output for the same period. This is therefore used when production is of homogenous items and is organised on a continuous or flow-line basis.

An abbreviation for business process re-engineering.

The delay between the time a payee or processing site receives a cheque and the time the cheque is deposited.

Also known as a Purchasing card.

(PPI). A measure of the change in prices of goods bought and sold by UK manufacturers.

A graphical representation of the amount of two products which can be made by an economy, assuming all resources are fully utilised.

(POBA). A key operating body of the Financial Reporting Council, which, it is proposed, will take on an extended role in connection with the oversight of the self regulatory apparatus of the actuarial profession.

Accounting. A surplus arising from the matching of revenues with expenditure.

An alternative name for Net profit.

1. A primary financial statement – showing the revenues earned in a period matched with the expenditures incurred in the same period to arrive at a figure of net profit or loss.

2. Another name for the Profit and Loss reserve in the balance sheet.

Profits which have been retained by the company and not distributed to the shareholders as dividends.

Accounting. A measure of the surplus of revenues over relevant costs, often expressed as a percentage.

The output level at which marginal cost equals marginal revenue.

A relative measure of profit, designed to facilitate comparisons between different businesses and between different time periods.

For example, Return on Capital Employed.

(PI). The profitability index is represented by the following formula:

Profitability index = PV/Co

Where: PV = the present value of all the cashflows except the initial investment.
Co = the absolute value of the initial investment.

Projects with a PI > 1 are acceptable.

(PCTCT). Tax adjusted profits of a company excluding franked investment income and after deducting charges and loss relief.

Law. A negative form of injunction.

The evaluation and selection of projects which are most likely to maximise shareholders' wealth by the comparative analysis of their cashflows.

(PBO). Pensions. The present value of pension benefits owed to employees under a pension scheme’s benefit formula including any projected salary increases and discounted at a nominal rate of interest.

Pensions. The earnings of active pension scheme members projected in line with assumed salary growth to the point of the member’s expected date of retirement or leaving service.

Pensions funding. An accrued benefits funding method in which the actuarial liability makes allowance for projected earnings.

An undertaking given by one person (the promisor) to another (the promisee) to do or refrain from doing something. Under most legal systems promises are legally binding only if they are contained in a contract or made by deed.

An unsecured note which unconditionally promises in writing to pay a certain sum of money to a person either on demand or at a future time.

Of a contract, the system of law that is applied in private international law to a contract with foreign elements.

The law concerning the ownership and transfer of ownership of property.

Accounting. The process of consolidation for a joint venture.

Pensions funding. A funding method in which the actuarial valuation at the valuation date is the present value of the actual benefits for pensioners and deferred pensioners and their dependants and the benefits that active members will receive in respect of both past and future Pensionable Service, allowing for future increases to salaries and benefits and net of the present value of future contributions payable in respect of active members at the standard contribution rate.

A document giving details relating to an issue of securities.

Accounting. A form of liability where there is uncertainty as to the amounts and timing of final settlement.

Credit given on a recourse basis when a cheque is deposited.

A conditional transfer in which one or more parties retain the right by law or agreement to revoke the transfer.

A person authorised to act for another. In relation to a company, a person empowered by a shareholder to vote on his behalf at company meetings.

Accounting. The accounting principle that income and assets should only be recognised when they are reasonably certain, whilst expenses and liabilities should always be recognised whenever they are probable.

Pension Schemes Registry.

Draft legislation dealing with public general interests. Most legislation passed by Parliament starts as a public bill.

1. Public companies may - subject to complying with certain conditions - be allowed to offer their shares for sale to the public. To protect the public, public companies are therefore subject to greater regulation and requirements to report fuller financial information within shorter timeframes, compared with private companies.

2. The term 'public company' is also used in a looser sense to refer to a company whose shares are already listed on an exchange and held by members of the public. More strictly however, such a company is a listed company.

(PCAOB). A body whose role is to police the auditing profession in the United States.

The system of law regulating the interrelationship of sovereign states and their rights and duties with regard to one another. In addition, certain international organisations, companies and sometimes individuals (e.g. in the sphere of human rights) may have rights or duties under international law.

Public key encryption, uses a pair of keys, one public, one private, to send encrypted messages. The keys work in a complementary manner so that information encrypted by one key can be decrypted by the other. Public key encryption is used when there are multiple senders and receivers of messages to provide authentication and confidentiality of the message and to prevent repudiation.

Also known as Asymmetric encryption.

(PKI). Public-key infrastructure uses one or more third parties, known as certificate authorities, to certify ownership of key pairs to prove that a public key is authentic, and has not been tampered with or replaced by a malicious third party.

Contract law. The law distinguishes between a reliable claim that induces a person to enter into a contract and 'mere puff', which does not. It is regarded as being no more than the salesperson's harmless praise of their product.

Accounting. The Purchase Day Book records all invoices and credit notes received.

In its simplest form, a contract purchased from an insurance company that pays a periodic income (for example monthly, quarterly, semi-annually, or annually) for the life of a person, or for the lives of two (or sometimes more) persons.
Many variations on this basic theme are available.
Generally that part of an annuity representing a return of capital is not taxable.

A card issued by non-bank organisations to allow the holder to pay for general procurement. Also know as a procurement card.

Purchasing power parity theory predicts that differences in periodic inflation rates will be offset and exactly matched by the change in the spot foreign exchange rate between the two related currencies over time.

1. See Put option.

2. To place. (As in put aside, put in place and the like.)

See Put-call parity theory.

An option which gives the holder the right to sell an asset at the strike price specified by the option.

Put-call parity theory links put and call option values via ‘no arbitrage’ assumptions and the related underlying price, strike price, time to maturity, and risk-free rate of return.

So for example if the put option value, underlying price, strike price, time to maturity, and risk-free rate of return are known, then the call option value can be calculated using the put-call parity relationship:
Underlying price + Put value less Call value = Present Value of strike price.

Abbreviation for Present Value.

Abbreviation for Price Value of a Basis Point.

Abbreviation for Price Value of a Basis Point.

Funds transfer. Abbreviation for Payment Versus Payment.