Price value of a basis point (PVBP)

Similar financial terms

Exercise price
Price at which the holder of an option can buy (call option) or sell (put option) the underlying stock. Also referred to as strike price.

Ask price
The price at which a market maker is prepared to sell a security. Also known as offer price.

Offer price
The price at which a market maker is prepared to sell a security. Also known as ask price.

Bid price
The price at which a market maker is prepared to buy a security.

Settlement price
The average of the prices that a futures contract trades for immediately before the bell signaling the close trading for a day. It is used in mark-to-market calculations.

Variable price security
A security, such as stocks or bonds, that sells at a fluctuating, market-determined price.

Transfer price
The price at which one unit of a firm sells goods or services to another unit of the same firm.

Theoretical futures price
Also called the fair price, the equilibrium futures price.

Subscription price
Price that the existing shareholders are allowed to pay for a share of stock in a rights issue.

Strike price
The stated price per share for which underlying stock may be purchased (in the case of a call) or sold (in the case of a put) by the option holder upon exercise of the option contract.

Stated conversion price
At the time of issuance of a convertible security, the price the issuer effectively grants the security holder to purchase the common stock, equal to the par value of the convertible security divided by the conversion ratio.

Spot price
The current marketprice of the actual physical commodity. Also called cash price.

Reverse price risk
A type of mortgage-pipeline risk that occurs when a lender commits to sell loans to an investor at rates prevailing at application but sets the note rates when the borrowers close. The lender is thus exposed to the risk of falling rates.

Put price
The price at which the asset will be sold if a put option is exercised. Also called the strike or exercise price of a put option.

Price-volume relationship
A relationship espoused by some technical analysts that signals continuing rises and falls in security prices based on accompanying changes in volume traded.

Price-specie-flow mechanism
Adjustment mechanism under the classical gold standard whereby disturbances in the price level in one country would be wholly or partly offset by a countervailing flow of specie (gold coins) that would act to equalize prices across countries and automatically bring international payments back in balance.

Prices
Price of a share of common stock on the date shown. Highs and lows are based on the highest and lowest intraday trading price.

Priced out
The market has already incorporated information, such as a low dividend, into the price of a stock.

Price takers
Individuals who respond to rates and prices by acting as though they have no influence on them.

Price risk
The risk that the value of a security (or a portfolio) will decline in the future. Or, a type of mortgage-pipeline risk created in the production segment when loan terms are set for the borrower in advance of terms being set for secondary market sale. If the general level of rates rises during the production cycle, the lender may have to sell his originated loans at a discount.

Price elasticity
The percentage change in the quantity divided by the percentage change in the price.

Price discovery process
The process of determining the prices of the assets in the marketplace through the interactions of buyers and sellers.

Price compression
The limitation of the price appreciation potential for a callable bond in a declining interest rate environment, based on the expectation that the bond will be redeemed at the call price.

Price/sales ratio
Determined by dividing current stock price by revenue per share (adjusted for stock splits). Revenue per share for the P/S ratio is determined by dividing revenue for past 12 months by number of shares outstanding.

Price/earnings ratio
Shows the "multiple" of earnings at which a stock sells. Determined by dividing current stock price by current earnings per share (adjusted for stock splits). Earnings per share for the P/E ratio is determined by dividing earnings for past 12 months by the number of common shares outstanding. Higher "multiple" means investors have higher expectations for future growth, and have bid up the stock's price.

Option price
Also called the option premium, the price paid by the buyer of the options contract for the right to buy or sell a security at a specified price in the future.

Opening price
The range of prices at which the first bids and offers were made or first transactions were completed.

Nominal price
Price quotations on futures for a period in which no actual trading took place.

Minimum price fluctuation
Smallest increment of price movement possible in trading a given contract. Also called point or tick. The zero-beta portfolio with the least risk.

Maximum price fluctuation
The maximum amount the contract price can change, up or down, during one trading session, as fixed by exchange rules in the contract specification.

Marketplace price efficiency
The degree to which the prices of assets reflect the available marketplace information. Marketplace price efficiency is sometimes estimated as the difficulty faced by active management of earning a greater return than passive management would, after adjusting for the risk associated with a strategy and the transactions costs associated with implementing a strategy.

Market prices
The amount of money that a willing buyer pays to acquire something from a willing seller, when a buyer and seller are independent and when such an exchange is motivated by only commercial consideration.

Market price of risk
A measure of the extra return, or risk premium, that investors demand to bear risk. The reward-to-risk ratio of the market portfolio.

Market conversion price
Also called conversion parity price, the price that an investor effectively pays for common stock by purchasing a convertible security and then exercising the conversion option. This price is equal to the market price of the convertible security divided by the conversion ratio.

Low price-earnings ratio effect
The tendency of portfolios of stocks with a low price-earnings ratio to outperform portfolios consisting of stocks with a high price-earnings ratio.

Low price
This is the day's lowest price of a security that has changed hands between a buyer and a seller.

Limit price
Maximum price fluctuation

Law of one price
An economic rule stating that a given security must have the same price regardless of the means by which one goes about creating that security. This implies that if the payoff of a security can be synthetically created by a package of other securities, the price of the package and the price of the security whose payoff it replicates must be equal.

Bargain-purchase-price option
Gives the lessee the option to purchase the asset at a price below fair market value when the lease expires.

Basis price
Price expressed in terms of yield to maturity or annual rate of return.

Call price
The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a specified call date.

Clean price
Bond price excluding accrued interest.

Consumer Price Index
The CPI, as it is called, measures the prices of consumer goods and services and is a measure of the pace of U.S. inflation. The U.S. Department of Labor publishes the CPI very month.

Convertible price
The contractually specified price per share at which a convertible security can be converted into shares of common stock.

Daily price limit
The level within many commodity, futures, and options markets are allowed to rise or fall in a day. Exchanges usually impose a daily price limit on each contract.

Equilibrium price
The price when the supply of goods matches demand.

Equilibrium market price of risk
The slope of the capital market line (CML). Since the CML represents the expected return offered to compensate for a perceived level of risk, each point on the line is a balanced market condition, or equilibrium. The slope of the line determines the additional expected return needed to compensate for a unit change in risk. The equation of the CML is defined by the Capital Asset Pricing Model (CAPM).

Known price item
When a good whose price is widely known by members of the public is priced to attract customers.

Variable Price Limit
A price limit schedule, determined by an exchange, that permits variations above or below the normally allowable price movement for any one trading day.

Commodity Price Index
Index or average, which may be weighted, of selected commodity prices, intended to be representative of the markets in general or a specific subset of commodities (for example, grains or livestock).

Price discrimination
Price discrimination occurs whenever a firm charges differential prices across customers that are not related to differences in production and distribution costs. Thus, discriminating firms seek to exploit the perceived consumer surplus and maximize producer surplus.

Principal value
The amount that the issuer of a bond agrees to repay the bondholder at the maturity date. The principal is also referred to redemption value, maturity value, par value or face value.

Back-end value
The amount paid to remaining shareholders in the second stage of a two-tier or partial tender offer.

Going-concern value
The value of a company as a whole over and above the sum of the values of each of its parts; the value of organization learning and reputation.

Terminal value
The value at maturity.

Book value per share
The intrinsic value of a company's stock. BVPS is calculated by dividing tangible capital dollar value by the number of outstanding shares of common stock.

Face value
Alternative name for par value.

Adjusted present value (APV)
The net present value analysis of an asset if financed solely by equity (present value of un-levered cash flows), plus the present value of any financing decisions (levered cash flows). In other words, the various tax shields provided by the deductibility of interest and the benefits of other investment tax credits are calculated separately. This analysis is often used for highly leveraged transactions such as a leverage buy-out.

Value manager
A manager who seeks to buy stocks that are at a discount to their "fair value" and sell them at or in excess of that value. Often a value stock is one with a low price to book value ratio.

Value dating
Refers to when value or credit is given for funds transferred between banks.

Value date
In the market for eurodollar deposits and foreign exchange, value date refers to the delivery date of funds traded. Normally it is on spot transactions two days after a transaction is agreed upon and the future date in the case of a forward foreign exchange trade.

Value additivity principal
Prevails when the value of a whole group of assets exactly equals the sum of the values of the individual assets that make up the group of assets. Stated differently, the principle that the net present value of a set of independent projects is just the sum of the net present values of the individual projects.

Value-at-Risk
A value-at-risk (VAR) model is a procedure for estimating the probability of portfolio losses exceeding some specified proportion based on a statistical analysis of historical market price trends, correlations, and volatilities.

Value-added tax
Value-added tax (VAT) is a method of indirect taxation whereby a tax is levied at each stage of production on the value added at that specific stage.

Utility value
The welfare a given investor assigns to an investment with a particular return and risk.

Time value of money
The idea that a dollar today is worth more than a dollar in the future, because the dollar received today can earn interest up until the time the future dollar is received.

Time value of an option
The portion of an option's premium that is based on the amount of time remaining until the expiration date of the option contract, and that the underlying components that determine the value of the option may change during that time. Time value is generally equal to the difference between the premium and the intrinsic value.

Straight value
Also called investment value, the value of a convertible security without the con-version option.

Standardized value
Also called the normal deviate, the distance of one data point from the mean, divided by the standard deviation of the distribution.

Salvage value
Scrap value of plant and equipment.

Residual value
Usually refers to the value of a lessor's property at the time the lease expires.

Replacement value
Current cost of replacing the firm's assets.

Relative value
The attractiveness measured in terms of risk, liquidity, and return of one instrument relative to another, or for a given instrument, of one maturity relative to another.

Present value of growth opportunities (PVGO)
The net present value (NPV) of investments the firm is expected to make in the future.

Present value factor
Factor used to calculate an estimate of the present value of an amount to be received in a future period.

Present value
The amount of cash today that is equivalent in value to a payment, or to a stream of payments, to be received in the future.

Par value
Also called the maturity value or face value, the amount that the issuer agrees to pay at the maturity date.

Original face value
The principal amount of the mortgage as of its issue date.

Net salvage value
The after-tax net cash flow for terminating the project.

Net present value rule
An investment is worth making if it has a positive NPV. Projects with negative NPVs should be rejected.

Net present value of future investments
The present value of the total sum of NPVs expected to result from all of the firm's future investments.

Net present value of growth opportunities
A model valuing a firm in which net present value of new investment opportunities is explicitly examined.

Net present value (NPV)
The present value of the expected future cash flows minus the cost.

Net book value
The current book value of an asset or liability; that is, its original book value net of any accounting adjustments such as depreciation.

Net asset value (NAV)
The value of a fund's investments. For a mutual fund, the net asset value per share usually represents the fund's market price, subject to a possible sales or redemption charge. For a closed end fund, the market price may vary significantly from the net asset value.

Net adjusted present value
The adjusted present value minus the initial cost of an investment.

Market value-weighted index
An index of a group of securities computed by calculating a weighted average of the returns on each security in the index, with the weights proportional to outstanding market value.

Market value ratios
Ratios that relate the market price of the firm's common stock to selected financial statement items.

Market value
(a) The price at which a security is trading and could presumably be purchased or sold. (b) The value investors believe a firm is worth; calculated by multiplying the number of shares outstanding by the current market price of a firm's shares.

Loan value
The amount a policyholder may borrow against a whole life insurance policy at the interest rate specified in the policy.

Liquidation value
Net amount that could be realized by selling the assets of a firm after paying the debt.

Bond value
With respect to convertible bonds, the value the security would have if it were not convertible apart from the conversion option.

Book value
A company's book value is its total assets minus intangible assets and liabilities, such as debt. A company's book value might be more or less than its market value.

Cash-surrender value
An amount the insurance company will pay if the policyholder ends a whole life insurance policy.

Conversion value
Also called parity value, the value of a convertible security if it is converted immediately.

Embedded value
A methodology that reflects future shareholder profits in the life insurance business. Embedded value equals the free surplus plus the value of inforce business. Embedded value is hard to compare with different companies since each company determines its own input parameters, for example the level of target surplus.

Salvage Value
Is the amount remaining after a depreciated useful life. It refers to the residual or recoverable value of a depreciated asset. It should be noted that the gross salvage value may be adjusted by a removal or disposal cost. This adjustment would lower the gross salvage value.

Extrinsic Value
The time value component of an option premium.

Basis point
One hundredth of 1 percent (0.01%). In the bond market, the smallest measure used for quoting yields is a basis point. Each percentage point of yield in bonds equals 100 basis points. Basis points also are used for interest rates. An interest rate of 10% is 50 basis points greater than an interest rate of 10.5%.

Agency basis
A means of compensating the broker of a program trade solely on the basis of commission established through bids submitted by various brokerage firms. agency incentive arrangement. A means of compensating the broker of a program trade using benchmark prices for issues to be traded in determining commissions or fees.

Bank discount basis
A convention used for quoting bids and offers for treasury bills in terms of annualized yield , based on a 360-day year.

Basis
Regarding a futures contract, the difference between the cash price and the futures price observed in the market. Also, it is the price an investor pays for a security plus any out-of-pocket expenses. It is used to determine capital gains or losses for tax purposes when the stock is sold.

Basis risk
The uncertainty about the basis at the time a hedge may be lifted. Hedging substitutes basis risk for price risk.

Bond-equivalent basis
The method used for computing the bond-equivalent yield.

Adjusted basis
The cost of property after adjustment for certain deductions or additions as permitted or prescribed by the U.S. tax laws. In some instances, the basis of property is derived from the basis of other parties - such as a donor or an estate.

Point and figure chart
A price-only chart that takes into account only whole integer changes in price, i.e., a 2-point change. Point and figure charting disregards the element of time and is solely used to record changes in price.

Bond points
A conventional unit of measure for bond prices set at $10 and equivalent to 1% of the $100 face value of the bond. A price of 80 means that the bond is selling at 80% of its face, or par value.

Cash-flow break-even point
The point below which the firm will need either to obtain additional financing or to liquidate some of its assets to meet its fixed costs.

Point-And-Figure
A method of charting which uses prices to form patterns of movement without regard to time. It defines a price trend as a continued movement in one direction until a reversal of a predetermined criterion is met.

Point
A measure of price change equal to 1/100 of one cent in most futures traded in decimal units. In grains, it is of one cent; in T-bonds, it is one percent of par.