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Glossary of Financial Terms: S


This article is from the Glossary of Financial Terms.

Glossary of Financial Terms: S

  • Sales charge
    The fee charged by a mutual fund when purchasing shares, usually payable as a commission to amarketing agent, such as a financial advisor, who is thus compensated for his assistance to a purchaser. It epresents the difference, if any, between the share purchase price and the share net asset value.

  • SEC
    The Securities and Exchange Commission, the primary federal regulatory agency of the securities industry.

  • Secondary market
    A market that provides for the purchase or sale of previously owned securities. Most trading is done in the secondary market. The New York Stock Exchange, as well as all other stock exchanges, the bond markets, etc., are secondary markets.

  • Selling short
    If an investor thinks the price of a stock is going down, the investor could borrow the stock from a broker and sell it. Eventually, s/he must buy the stock back on the open market. For instance, you borrow 1000 shares of XYZ on July 1 and sell it for $8 per share. Then, on Aug 1, you purchase 1000 shares of XYZ at $7 per share. You've made $1000 (less commissions and other fees) by selling short.

  • Series
    Options: All option contracts of the same class that also have the same unit of trade, expiration date, and exercise price.Stocks: shares which have common characteristics, such as rights to ownership and voting, dividends, par value, etc. In the case of many foreign shares, one series may be owned only by citizens of the country in which the stock is registered.

  • Settlement date
    The date on which payment is made to settle a trade. For stocks traded on US exchanges, settlement is currently 5 business days after the trade, but this will be reduced to 3 days in 1995. For mutual funds, settlement usually occurs in the U.S. the day following the trade. In some regional markets, foreign shares may require months to settle.

  • Shares
    Certificates or book entries representing ownership in a corporation or similar entity

  • Share repurchase
    Program by which a corporation buys back its own shares in the open market. It is usually done when shares are undervalued. Since it reduces the number of shares outstanding and thus increases earnings per share, it tends to elevate the market value of the remaining shares held by stockholders.

  • Short position (Options)
    A position wherein a person's interest in a particular series of options is as a net writer (ie, the number of contracts sold exceeds the number of contracts bought).

  • Short position (Stocks)
    Occurs when a person sells stocks s/he does not yet own. Shares must be borrowed, before the sale, to make "good delivery" to the buyer. Eventually, the shares must be bought to close out the transaction. Technique is used when an investor believes the stock price is going down.

  • Short sale
    Selling a security that the seller does not own but is committed to repurchasing eventually. It is used to capitalize on an expected decline in the security's price.

  • Slippage
    The difference between estimated transaction costs and actual transaction costs. The difference is usually composed of revisions to price difference or spread and commission costs.

  • SIC
    Abbreviation for Standard Industrial Classification. Each 4-digit code represents a unique business activity.

  • Stock dividend
    Payment of a corporate dividend in the form of stock rather than cash. The stock dividend may be additional shares in the company, or it may be shares in a subsidiary being spun off to shareholders. Stock dividends are often used to conserve cash needed to operate the business. Unlike a cash dividend, stock dividends are not taxed until sold.

  • Stop (-loss) order
    An order to sell a stock when the price falls to a specified level.

  • 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.


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