Copy of `New York Times - Business and Finance Glossary`

The wordlist doesn't exist anymore, or, the website doesn't exist anymore. On this page you can find a copy of the original information. The information may have been taken offline because it is outdated.

New York Times - Business and Finance Glossary Category: Economy and Finance Date & country: 11/09/2007, USA Words: 2680

Shareholders' letter
A section of an annual report where one can find jargon-free discussions by management of successful and failed strategies which provides guidance for the probing of the rest of the report.

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

Shark repellant
Amendment to company charter intended to protect it against takeover.

Sharpe benchmark
A statistically created benchmark that adjusts for a managers' index-like tendencies.

Sharpe ratio
A measure of a portfolio's excess return relative to the total variability of the portfolio. Related: treynor index

Shelf registration
A procedure that allows firms to file one registration statement covering several issues of the same security.

Shirking
The tendency to do less work when the return is smaller. Owners may have more incentive to shirk if they issue equity as opposed to debt, because they retain less ownership interest in the company and therefore may receive a smaller return. Thus, shirking is considered an agency cost of equity.

Shogun bond
Dollar bond issued in Japan by a nonresident.

Shop
Wall Street jargon for a firm.

Shopping
Seeking to obtain the best bid or offer available by calling a number of dealers and/or brokers.

Short
One who has sold a contract to establish a market position and who has not yet closed out this position through an offsetting purchase; the opposite of a long position. Related: Long.

Short bonds
Bonds with short current maturities.

Short book
See: unmatched book.

Short hedge
The sale of a futures contract(s) to eliminate or lessen the possible decline in value ownership of an approximately equal amount of the actual financial instrument or physical commodity.Related: Long hedge.

Short interest
This is the total number of shares of a security that investors have borrowed, then sold in the hope that the security will fall in value. An investor then buys back the shares and pockets the difference as profit.

Short position
Occurs when a person sells stocks he or she 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. This technique is used when an investor believes the stock price will go 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.

Short selling
Establishing a market position by selling a security one does not own in anticipation of the price of that security falling.

Short squeeze
A situation in which a lack of supply tends to force prices upward.

Short straddle
A straddle in which one put and one call are sold.

Short-run operating activities
Events and decisions concerning the short-term finance of a firm, such as how much inventory to order and whether to offer cash terms or credit terms to customers.

Short-term financial plan
A financial plan that covers the coming fiscal year.

Short-term investment services
Services that assist firms in making short-term investments.

Short-term solvency ratios
Ratios used to judge the adequacy of liquid assets for meeting short-term obligations as they come due, including (1) the current ratio, (2) the acid-test ratio, (3) the inventory turnover ratio, and (4) the accounts receivable turnover ratio.

Short-term tax exempts
Short-term securities issued by states, municipalities, local housing agencies, and urban renewal agencies.

Shortage cost
Costs that fall with increases in the level of investment in current assets.

Shortfall risk
The risk of falling short of any investment target.

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

Side effects
Effects of a proposed project on other parts of the firm.

Sight draft
Demand for immediate payment.

Signal
The process of conveying information through a firm's actions.

Signaling approach
Approach to the determination of the optimal capital structure asserting that insiders in a firm have information that the market does not have; therefore, the choice of capital structure by insiders can signal information to outsiders and change the value of the firm. This theory is also called the asymmetric information approach.

Signaling view (on dividend policy)
The argument that dividend changes are important signals to investors about changes in management's expectation about future earnings.

Simple compound growth method
A method of calculating the growth rate by relating the terminal value to the initial value and assuming a constant percentage annual rate of growth between these two values.

Simple interest
Interest calculated only on the initial investment. Related:compound interest.

Simple linear regression
A regression analysis between only two variables, one dependent and the other explanatory.

Simple linear trend model
An extrapolative statistical model that asserts that earnings have a base level and grow at a constant amount each period.

Simple moving average
The mean, calculated at any time over a past period of fixed length.

Simple prospect
An investment opportunity where a certain initial wealth is placed at risk and only two outcomes are possible.

Simulation
The use of a mathematical model to imitate a situation many times in order to estimate the likelihood of various possible outcomes. See: Monte Carlo simulation.

Single country fund
A mutual fund that invests in individual countries outside the United States.

Single factor model
A model of security returns that acknowledges only one common factor. See: factor model.

Single index model
A model of stock returns that decomposes influences on returns into a systematic factor, as measured by the return on the broad market index, and firm specific factors.

Single-index model
Related: market model

Single-payment bond
A bond that will make only one payment of principal and interest.

Single-premium deferred annuity
An insurance policy bought by the sponsor of a pension plan for a single premium. In return, the insurance company agrees to make lifelong payments to the employee (the policyholder) when that employee retires.

Sinker
Sinking fund.

Sinking fund requirement
A condition included in some corporate bond indentures that requires the issuer to retire a specified portion of debt each year. Any principal due at maturity is called the balloon maturity.

Size
Large in size, as in the size of an offering, the size of an order, or the size of a trade. Size is relative from market to market and security to security. Context: 'I can buy size at 102-22,' means that a trader can buy a significant amount at 102-22.

Skewed distribution
Probability distribution in which an unequal number of observations lie below and above the mean.

Skip-day settlement
The trade is settled one business day beyond what is normal.

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.

Small issues exemption
Securities issues that involve less than $1.5 million are not required to file a registration statement with the SEC. Instead, they are governed by Regulation A, for which only a brief offering statement is needed.

Small-firm effect
The tendency of small firms (in terms of total market capitalization) to outperform the stock market (consisting of both large and small firms).

Smithsonian agreement
A revision to the Bretton Woods international monetary system which was signed at the Smithsonian Institution in Washington, D.C., U.S.A., in December 1971. Included were a new set of par values, widened bands to +/- 2.25% of par, and an increase in the official value of gold to US$38.00 per ounce.

Soft Capital Rationing
Capital rationing that under certain circumstances can be violated or even viewed as made up of targets rather than absolute constraints.

Soft currency
A currency that is expected to drop in value relative to other currencies.

Soft dollars
The value of research services that brokerage houses supply to investment managers 'free of charge' in exchange for the investment manager's business/commissions.

Sole proprietorship
A business owned by a single individual. The sole proprietorship pays no corporate income tax but has unlimited liability for business debts and obligations.

Sovereign risk
The risk that a central bank will impose foreign exchange regulations that will reduce or negate the value of FX contracts. Also refers to the risk of government default on a loan made to it or guaranteed by it.

Span
To cover all contingencies within a specified range.

Special dividend
Also referred to as an extra dividend. Dividend that is unlikely to be repeated.

Special drawing rights (SDR)
A form of international reserve assets, created by the IMF in 1967, whose value is based on a portfolio of widely used currencies.

Specialist
On an exchange, the member firm that is designated as the market maker (or dealer for a listed common stock). Only one specialist can be designated for a given stock, but dealers may be specialists for several stocks. In contrast, there can be multiple market makers in the OTC market.

Specific issues market
The market in which dealers reverse in securities they wish to short.

Specific risk
See:unique risk.

Spectail
A dealer that does business with retail but that concentrates more on acquiring and financing its own speculative positions.

Speculative demand (for money)
The need for cash to take advantage of investment opportunities that may arise.

Speculative grade bond
Bond rated Ba or lower by Moody's, or BB or lower by S&P, or an unrated bond.

Speculative motive
A desire to hold cash for the purpose of being in a position to exploit any attractive investment opportunity requiring a cash expenditure that might arise.

Speculator
One, who attempts to anticipate price changes and, through buying and selling contracts, aims to make profits. A speculator does not use the market in connection with the production, processing, marketing or handling of a product.See: trader.

Speed
Related:prepayment speed

Spin-off
A company can create an independent company from an existing part of the company by selling or distributing new shares in the so-called spinoff.

Split
Sometimes, companies split their outstanding shares into a larger number of shares. If a company with 1 million shares did a two-for-one split, the company would have 2 million shares. An investor with 100 shares before the split would hold 200 shares after the split. The investor's percentage of equity in the company remains the same, and the price of the stock he owns is one-half the price of the stock on the day prior to the split.

Split-fee option
An option on an option. The buyer generally executes the split fee with first an initial fee, with a window period at the end of which upon payment of a second fee the original terms of the option may be extended to a later predetermined final notification date.

Split-rate tax system
A tax system that taxes retained earnings at a higher rate than earnings that are distributed as dividends.

Spot exchange rates
Exchange rate on currency for immediate delivery. Related: forward exchange rate.

Spot futures parity theorem
Describes the theoretically correct relationship between spot and futures prices. Violation of the parity relationship gives rise to arbitrage opportunities.

Spot interest rate
Interest rate fixed today on a loan that is made today. Related: forward interest rates.

Spot lending
The origination of mortgages by processing applications taken directly from prospective borrowers.

Spot markets
Related: cash markets

Spot month
The nearest delivery month on a futures contract.

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

Spot rate
The theoretical yield on a zero-coupon Treasury security.

Spot rate curve
The graphical depiction of the relationship between the spot rates and maturity.

Spot trade
The purchase and sale of a foreign currency, commodity, or other item for immediate delivery.

Spread
(1) The gap between bid and ask prices of a stock or other security. (2) The simultaneous purchase and sale of separate futures or options contracts for the same commodity for delivery in different months. Also known as a straddle. (3) Difference between the price at which an underwriter buys an issue from a firm and the price at which the underwriter sells it to the public. (4) The price an issuer pays above a benchmark fixed-income yield to borrow money.

Spread income
Also called margin income, the difference between income and cost. For a depository institution, the difference between the assets it invests in (loans and securities) and the cost of its funds (deposits and other sources).

Spread strategy
A strategy that involves a position in one or more options so that the cost of buying an option is funded entirely or in part by selling another option in the same underlying. Also called spreading.

Spreadsheet
A computer program that organizes numerical data into rows and columns on a terminal screen, for calculating and making adjustments based on new data.

Stakeholders
All parties that have an interest, financial or otherwise, in a firm - stockholders, creditors, bondholders, employees, customers, management, the community, and the government.

Stand-alone principle
Investment principle that states a firm should accept or reject a project by comparing it with securities in the same risk class.

Standard deviation
The square root of the variance. A measure of dispersion of a set of data from their mean.

Standard error
In statistics, a measure of the possible error in an estimate.

Standardized normal distribution
A normal distribution with a mean of 0 and a standard deviation of 1.

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

Standby agreement
In a rights issue, agreement that the underwriter will purchase any stock not purchased by investors.

Standby fee
Amount paid to an underwriter who agrees to purchase any stock that is not subscribed to the public investor in a rights offering.

Standstill agreements
Contracts where the bidding firm in a takeover attempt agrees to limit its holdings another firm.

Stated annual interest rate
The interest rate expressed as a per annum percentage, by which interest payment is determined.