Page 132 - PRIAA Glossary

POWER REVERSE DUAL CURRENCY TRANSACTIONS
A power reverse dual currency note or swap is a leveraged structured product made up of a series of currency options exposing counterparties to variations in interest rate differentials between countries.
PRECEDING BUSINESS DAY CONVENTION
A type of business day convention where payment days that fall on a bad business day roll back to the preceding good business day.
PREFERRED STOCK
A type of stock with a higher claim to the assets and earnings of a corporation. Preferred stock has ownership but is usually not granted voting rights. Common stock dividends are paid out from the remainder of earnings after preferred stock dividends are awarded.
PREMIUM
1) The price of an option, paid by the purchaser to the option grantor, for the right to buy or sell the underlying at the specified strike price. 2) The additional payment allowed by exchange regulation for delivery of higher-than-required standards or grades of a commodity against a futures contract. 3) The dollar amount by which a security trades above its principal value. See also “issue price”.
PRESENT VALUE
For an over-the-counter (OTC) derivative, the discounted individual-leg sum of all future cash flows on the derivative based on today’s values for the underlying market variables.
PREVENTATIVE CONTROL
A control that may prevent a possible event (e.g., fraud, error, non-compliance) from occurring.
PRICE ALIGNMENT INTEREST
The interest received or paid (usually at an overnight rate) on collateral pledged as variation margin.
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