T/P
T/P stands for “trade/price” and is a financial term used to describe the relationship between the price of a security and the amount of trading activity that takes place in the security. It is used to measure the liquidity of a security, which is the ability of a security to be bought and sold quickly and at a fair price. The T/P ratio is calculated by dividing the total trading volume of a security by its price. A higher T/P ratio indicates that the security is more liquid, while a lower T/P ratio indicates that the security is less liquid.
History of T/P
The concept of T/P was first introduced in the early 20th century by economist Irving Fisher. Fisher argued that the price of a security is determined by the amount of trading activity that takes place in the security. He argued that the more trading activity that takes place in a security, the higher the price of the security will be. This concept has since been adopted by financial analysts and investors as a way to measure the liquidity of a security.
Comparison Table
| Security | Trading Volume | Price | T/P Ratio |
|---|---|---|---|
| Security A | 100 | $10 | 10 |
| Security B | 50 | $20 | 2.5 |
As seen in the table above, Security A has a higher T/P ratio than Security B, indicating that it is more liquid than Security B.
Summary
T/P is a financial term used to measure the liquidity of a security. It is calculated by dividing the total trading volume of a security by its price. A higher T/P ratio indicates that the security is more liquid, while a lower T/P ratio indicates that the security is less liquid. For more information about T/P, investors can visit websites such as Investopedia and The Balance.
See Also
- Liquidity
- Trading Volume
- Price
- Market Capitalization
- Beta
- Volatility
- Price-to-Earnings Ratio
- Dividend Yield
- Return on Equity
- Return on Investment
