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Glossary

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There are 6 names in this directory beginning with the letter P.
P/B Ratio
The price-to-book ratio, also known as the P/B ratio is a financial ratio used to compare the book value of a company to its current market price. It is calculated by dividing a company's stock price by its book value per share (BVPS). The P/B ratio is mostly used by value investors to identify undervalued stocks in a specific industry. Watch Video

 

P/E Ratio
The price-earnings ratio, also known as P/E ratio is a financial ratio used for valuing companies. It is calculated by dividing the company’s share price by the company's earnings per share. The P/E ratio is mostly used to determine if a stock is overvalued or undervalued by providing a relative value of a company's shares in an apples-to-apples comparison to other companies in the same industry.

 

Passive Management
Passive management, also known as indexing, is an investment strategy where a fund’s portfolio tracks the performance of a benchmark market index to replicate its returns. In passive management, there is no professional investment manager making decisions about asset allocation for a fund’s portfolio, rather the portfolio mirrors the asset allocation of the index that it is replicating.

A strong proponent of passive management investment style is the Efficient Market Hypothesis that says in the long-term passive management returns better returns than active management whose success in beating the market is only a matter of luck. Watch Video

 

Passively-managed Fund
Passively-managed funds also known as index funds are funds that track a benchmark index for fund’s performance. The investment decisions of the fund are not made by a professional investment management team, but rather follow predetermined guidelines for the allocation of their asset holdings in their fund.
Passively-managed funds are usually less expensive than actively managed funds because they don't charge management fees. Watch Video

 

Portfolio
In finance, a portfolio is a basket of financial assets that are held by a portfolio manager for investments. Portfolios can contain a wider selection of investments ranging from equity stocks to mutual funds and currencies. These securities are held in such a way to help the portfolio minimize its portfolio risk and meet its investment objectives. Watch Video

 

Portfolio Optimization
Portfolio optimization is the process of selecting the most optimal portfolio, out of a set of portfolios to meet some portfolio objective. The objective typically seeks to maximize return and minimize the risk of a portfolio. Watch Video