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Glossary

Position Limit

The highest amount of futures or options contracts set by the Exchange,  that any one investor may hold on an underlying security.

Preemptive Right

A clause for select shareholders of a corporation that provides the right to maintain percentage ownership of a company through purchasing a proportionate amount of shares of any future shares issuance of the security.

Preferred Stock

A type of stock ownership that provides a fixed dividend and has a higher hierarchy in the payment of dividend over common stockholders.

Premium

The complete cost of an option.

Price Action

The fluctuation in value for a security’s price.

Price Weighted Index

A stock index where each stock impacts the value of the index proportionate to it’s price per share.

Price/Earnings Ratio

A company valuation tool that measures current share price against per-share earnings. It’s a good indicator for investor demand for the company’s shares.

Prime Rate

The rate of interest that U.S. banks collect from their best rated customers.

Profit Margin

A corporate evaluative formula that divides Net Income by revenue for a specified period.

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