Page 135 - PRIAA Glossary

PRUDENT MAN (PERSON) PRINCIPLE
A standard that requires that a fiduciary entrusted with the funds for investment may invest such funds only in securities that any reasonable individual interested in receiving a good return of income while preserving his or her capital would purchase.
PRUDENTIAL REGULATION AUTHORITY (PRA)
Part of the Bank of England, responsible for the regulation and supervision of financial firms promoting safety and soundness in the UK’s financial system.
PUT OPTION
A contract that grants its purchaser the right, but not the obligation, to sell the underlying instrument at a specified strike price on (European option) or before (American option) the expiration date. Compare with “call option”.
PUT-CALL PARITY
The relationship between European call and put options on the same underlying asset, for the same strike and expiry. The value of a portfolio containing a long call option and a short put option is equal to the value of a forward contract for the same strike and expiry.
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