The price-to-earnings (P/E) ratio is the valuation ratio of a company's market value per share divided by the company's earnings per share. A P/E ratio of 10 means that the company's stock price is trading at 10 times the company's earnings per share. Taobiz explains P/E 10 Ratio A P/E ratio of 10 is a rather conservative ratio in comparison to the stock market's historical valuations. This low P/E ratio could be a result of a slow-growing company being in a slow-growing industry, like the automobile industry. At times, however, even faster growing companies can have low P/E ratios. This may occur during a recession when investors' confidence is low regarding future prospects for the economy.
A condition in which a market is considered to be overbought, overly bullish, overvalued and is experiencing upward pressure on Treasury yields. If the market falls into this condition, it is thought to be a warning sign to investors of potential near-term market downturns along with the potential for longer term negatives. Taobiz explains Ovoboby This term was coined by John Hussman, a fund manager and market researcher, to reflect certain market conditions. The market is considered to be overbought when the S&P 500 is at a four-year high and is also trading 5% higher than the levels of the index six months ago. The market is considered to be overly bullish when the bullish sentiment of advisors within the Advisors Sentiment Index, created by Investors Intelligence, is above 53%. The market is considered to be overvalued when the price/peak earnings of the S&P 500 are above 18. The yields in the market are considered to be facing upward pressure when the yield on a three-month Treasury is higher than it was six months earlier.
A privilege provided to existing shareholders in a company when the company issues a rights or warrants offering. This enables shareholders to "subscribe" to purchase extra shares that are not picked up by the remaining shareholders. When a company issues a rights or warrants offering, existing shareholders are given the option to maintain their current percentage of ownership in the company by acquiring the rights to further shares. If any current shareholders decide to not accept all of the rights for which they are eligible, these extra rights/warrants become available to the rest of the shareholders at a predetermined ratio (ie. the right to purchase 0.25 shares for every existing share held). Taobiz explains Oversubscription Privilege There will always be a maximum number of rights or warrants available on the whole, and should there be more oversubscription demand than supply available, whatever is left over will be allocated on a pro-rata basis to those who pick up their oversubscription privilege. Companies that decide to issue a rights or warrants offering do so in lieu of a secondary stock offering, which would be available to other investors as well. While the goal of all three offerings is to raise capital for the issuer, if a company bypasses conducting a secondary stock offering, then it shows investor demand is not high enough for them to do so.
A situation in which the demand for an initial public offering of securities exceeds the number of shares issued. Taobiz explains Oversubscribed The goal of a public offering usually is to price the security issue at the exact price at which all the issued shares can be sold to investors, so there will be neither a shortage nor a surplus of securities. If there is more demand for a public offering than there is supply (shortage), it means a higher price could have been charged and the issuer could have raised more capital.
An illegal action by a group of market manipulators buying and/or selling a security among themselves to create artificial trading activity, which, when reported on the ticker tape, lures in unsuspecting investors as they perceive an unusual volume. Taobiz explains Painting The Tape After causing a movement in the security, the manipulators hope to sell at a profit.
The total amount of shareholder capital that has been paid in full by shareholders. Taobiz explains Paid-Up Capital Paid-up capital is essentially the portion of authorized stock that the company has issued and received payment for.
The amount of capital "paid in" by investors during common or preferred stock issuances, including the par value of the shares themselves. Paid in capital represents the funds raised by the business from equity, and not from ongoing operations. Paid in capital is a company balance sheet entry listed under stockholder's equity, often shown alongside the balance sheet entry for additional paid-in capital. It may also be referred to as "contributed capital". Taobiz explains Paid In Capital Paid in capital can be compared to additional paid in capital, and the difference between the two values will equal the premium paid by investors over and above the par value of the shares. Preferred shares will sometimes have par values that are more than marginal, but most common shares today have par values of just a few pennies. Because of this, "additional paid in capital" tends to be representative of the total paid-in capital figure, and is sometimes shown by itself on the balance sheet.
An order that contains a number of exchange or deposit items that must be completed simultaneously, or not at all. Package deals allow traders to ensure specific prices or times to maturity for multiple assets. Taobiz explains Package Deal A trader may want to participate in a package deal to properly execute an investment strategy. For example, let's say an investor wants to enter into a long-short strategy, where he or she purchases one stock and short sells another. Making this order a package deal will protect the investor in case either stock is not immediately available for purchase or sale. The investor may not want the exposure of being only long or short for the period of time required to complete the second transaction.
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