Glossary

P/E Ratio

Price to Earnings ratio (P/E ratio) shows the relationship between a stock's price and a company's earnings. The P/E ratio is calculated by dividing the current price of the stock by the earnings per share (either the company's trailing annual earnings per share or the company's expected earnings per share in the coming year). This is used to compare the relative value of different stocks. The P/E ratio is also called the earnings multiple.

Prepayment

A payment made by the borrower to the lender in advance of when it is due. Loans often carry prepayment fees, and thus, the company receives additional income with the prepayment of loans.

Price Target

A stock price that an analyst forecasts will be reached by some future date.

Prime Rate

A commonly used, short-term interest rate that banks in the United States use in pricing commercial loans.

Provision for Loan Losses

A noncash expense charged against earnings when adding to the allowance fee loan losses.