What Is a Prime Borrower? A prime borrower is someone who is considered a below-average credit risk. This type of borrower is considered likely to make loan payments on time and likely to repay the loan in full. Understanding Prime Borrower Prime borrowers have credit files that show a strong history of using credit wisely
What Is a Prime Brokerage? A prime brokerage is a bundled group of services that investment banks and other financial institutions offer to hedge funds and other large investment clients that need to be able to borrow securities or cash in order to engage in netting to achieve absolute returns. The services provided under prime
What Is a Price Band? A price band is a value-setting method in which a seller indicates an upper and lower cost limit, between which buyers are able to place bids. The price band’s floor and cap provide guidance to the buyers. This type of auction pricing technique is often used with initial public offerings (IPOs).
What Is a Price by Volume Chart (PBV)? A price by volume (PBV) chart is a horizontal histogram plotted on a security’s chart, showing the volume of shares traded at a specific price level. Often times, price by volume histograms are found on the Y-axis and are used by technical traders to predict areas of support
What Is a Price Change? A price change in the stock market is a shift in the value of a security or another asset to either a higher or lower level. The term also refers to the difference between a stock’s closing price on a trading day and its closing price on the previous trading
What Is a Price Channel? The term price channel refers to a signal that appears on a chart when a security’s price becomes bounded between two parallel lines. The price channel may be termed horizontal, ascending, or descending depending on the direction of the trend. Price channels are often used by traders who practice the
What Are Price Controls? The term “price controls” refers to the legal minimum or maximum prices set for specified goods. Price controls are normally mandated by the government in the free market. They are usually implemented as a means of direct economic intervention to manage the affordability of certain goods and services, including rent, gasoline
What Is Price Discovery? Price discovery is the overall process, whether explicit or inferred, of setting the spot price or the proper price of an asset, security, commodity, or currency. The process of price discovery looks at a number of tangible and intangible factors, including supply and demand, investor risk attitudes, and the overall economic and geopolitical
What Is the Price-to-Earnings (P/E) Ratio? The price-to-earnings ratio is the ratio for valuing a company that measures its current share price relative to its earnings per share (EPS). The price-to-earnings ratio is also sometimes known as the price multiple or the earnings multiple. P/E ratios are used by investors and analysts to determine the relative value of a
DEFINITION of Price-Earnings Relative Price-earnings relative refers to the price-earnings ratio of a stock divided by the price-earnings ratio of a broader market measure. The price-earnings ratio, often written as P/E, is equal to a stock’s or broad market’s market price divided by a measure of the stock’s or market’s earnings. There are many methods
