What Is a Price Swap Derivative? A price swap derivative is a derivative transaction where one entity guarantees a fixed value for the total asset holdings of another entity over a specified period. Under this type of agreement, whenever the value of the secured assets declines, the counterparty must deliver securities or other collateral to
What Is the Price-to-Book (P/B) Ratio? Many investors use the price-to-book ratio (P/B ratio) to compare a firm’s market capitalization to its book value and locate undervalued companies. This ratio is calculated by dividing the company’s current stock price per share by its book value per share (BVPS). Key Takeaways The price-to-book (P/B) ratio measures the
What Is the Price to Free Cash Flow Ratio? Price to free cash flow (P/FCF) is an equity valuation metric that compares a company’s per-share market price to its free cash flow (FCF). This metric is very similar to the valuation metric of price to cash flow but is considered a more exact measure because it
What Is a Prepayment Penalty? A prepayment penalty is usually specified in a clause in a mortgage contract stating that a penalty will be assessed if the borrower significantly pays down or pays off the mortgage before term, usually within the first three years of committing to the loan. The penalty is sometimes based on
What Is Prepayment Risk? Prepayment risk is the risk involved with the premature return of principal on a fixed-income security. When debtors return part of the principal early, they do not have to make interest payments on that part of the principal. That means investors in associated fixed-income securities will not receive interest paid on
What Is a Prepetition Liability? When a company or individual files for bankruptcy, they must first list all their debts. These are called prepetition liabilities. Post-petition liability, on the other hand, is all the debt incurred after the bankruptcy case is logged. These two types of liabilities are often shown on the balance sheets of
What Is Pre-Qualification? The term pre-qualification refers to an estimate for credit given by a lender based on information provided by a borrower. Pre-qualifications are conditional and involve the lender reviewing a borrower’s creditworthiness before granting a pre-approval. Lenders generally use this as a marketing tactic for creditors seeking to obtain new customers, especially for
What Is a Pre-Refunding Bond? A pre-refunding bond is a debt security that is issued in order to fund a callable bond. With a pre-refunding bond, the issuer decides to exercise its right to buy its bonds back before the scheduled maturity date. The proceeds from the issue of the lower yield and/or longer maturing
What Is Presenteeism? Presenteeism refers to the lost productivity that occurs when employees are not fully functioning in the workplace because of an illness, injury, or other condition. Even though the employee may be physically at work, they may not be able to fully perform their duties and are more likely to make mistakes on the
What is the Present Situation Index? The Present Situation Index is a subindex that measures overall consumer sentiment regarding the present economic situation. This index is determined via a survey conducted for the Conference Board by Nielsen, and it is used to derive the Consumer Confidence Index. This is also sometimes known as the Current
