Complete Guide to Basic Investing - Stocks, Bonds & Mutual Funds

Sale and Leaseback: The sale of an asset which is immediately leased from the new owner. Such a transaction helps to increase short-term cash flow for the seller, and can provide tax advantages.

Sallie Mae-Student Loan Marketing Association: A government-funded agency that guarantees student loans, purchasing them from financial institutions and selling them on the secondary market.

Sector: Stocks from one particular industry. Stocks from firms in the automotive industry are in the automotive sector, for instance. Brokerage firms may specialize in tracking particular sectors.

Securities and Exchange Commission (SEC): The government agency responsible for monitoring the issuance and sale of securities.

Security Interest: The right to collateral in return for granting some form of financing. A creditor has a security interest in assets that have been pledged as collateral on a loan.

Secondary Offering: The offering for sale of a large block of stock that is not a new issue, but one that is held by a large stock holder, usually a company founder, and proceeds of the sale go to those holders, not the issuing company. Such an offering is generally sponsored or underwritten by an investment bank, much in the same way as an IPO.

Securities: A general term for stocks, Bonds, an Certificates of Deposit.

Securities Analyst: An individual who does investment research and makes recommendations to buy, sell, or hold. Most analysts specialize in a single industry or business sector.

Secured Creditor: A person or business holding a claim against a debtor that is secured with collateral or a lien on the debtor’s property.

Segment: A grouping of customers within a market with similarities in their purchasing needs or preferences.

Self-liquidating Premium: A premium paid in part or in full by the buyer. Includes gimmicks offered on the side of cereal boxes.

Senior Debt: Debt that must be paid before subordinated debt, such as common stock, can be paid. This is a consideration in bankruptcy situations.

Settlement: 1. Completing a transaction by paying all obligations. 2. The conclusion of a securities transaction; a broker/dealer buying securities pays for them; a selling broker delivers the securities to the buyer's broker.

Settlement Date (T+3): The date specified for delivery of securities between securities firms, usually three business days after the execution of an order.

Shakeout: The shutdown or closing of several firms in an industry, leaving only a few dominant players.

Share: One unit of stock in a corporation.

Shareholder / Stockholder: The owner of any number of shares of a company’s stock.

Shareholder of Record: The name of an individual or entity that an issuer carries on its books as the registered holder (not necessarily the beneficial owner) of the issuer's securities.

Shark Repellent: Provisions established by a corporation to discourage unwanted takeover attempts by making it more expensive and difficult to purchase the company.

Short: Selling a stock or option that you don’t own (the broker lends it to you and charges you interest). You hope the price will go down so you can repay with cheaper stock, keeping the difference as a profit.

Short Position: A stock purchase procedure that involves "borrowing" shares of stock through a broker, selling them, and repurchasing them when the price has dropped. The buyer never actually takes possession of the shares and can make a profit if the shares are repurchased for less than what they were "borrowed" for. However, if the stock price rises, the buyer must pay to buy back the shares, thereby losing money.

Short Sale Rule: A Nasdaq rule that prohibits NASD members from selling a Nasdaq National Market stock at or below the inside best bid when that price is lower than the previous inside best bid in that stock.

Shrinkage: Losses experienced from worker and customer shoplifting.

Simple Interest: Interest earned only on the initial capital investment. Unlike compound interest, which continues to accrue on both the capital and the earned interest, simple interest only applies to the capital.

Smokestack Industry: Basic manufacturing industries that have experienced minimal growth during the past decades.

Sovereign Risk: Risk that lenders assume when making loans to foreign governments due to the fact that a change in the national power structure could cause the country to default on its commitments.

Specialist: A member of the securities exchange responsible for executing securities trades on a particular stock.

Spin-off: Separating a corporate division from the parent company and establishing it as its own independent operating unit.

Split: Increasing the number of shares outstanding without increasing the shareowner's equity, causing a drop in the share price proportional to the number of new shares. Can be 2 for 1, 3 for 1,etc.

Sponsor: A trader, generally an institution or brokerage firm, whose large scale purchases influence the purchases of other traders. The demand for a stock can be significantly affected by the actions of a sponsor.

Spread: The difference between the bid and ask price.

Standard Industrial Classification (SIC) codes: A numbering system established by the U.S. Office of Management and Budget that identifies companies by industry. It is used to promote the comparability of economic statistics from various sectors of the U.S. economy.

Strike Price: The option price that, if a call, you can buy at, or if a put, you may sell the security at.

Stock: A security that represents partial ownership of a corporation. Stocks are referred to as equities.

Stock Split: When a company decides that they will issue multiple shares for each old share. The stock price adjusts proportionately Stock dividend-A dividend paid in shares of stock instead of cash.

Stock Option: The opportunity to purchase shares of stock at a specified price and within a specified time period.

Stock Symbol: A unique four- or five-letter symbol assigned to a Nasdaq security, or a 1 to 3 letter designation for stocks traded on the NYSE and American exchanges. This is used for identifying it on stock tickers, in newspapers, and on on-line services. If a fifth letter appears, it identifies the issue as other than a single issue of common or capital stock.

Stop Order: An order given to a broker to buy or sell a security when it reaches a certain price.

Stop Loss Order: An order given to a broker to sell a security when it drops to a certain price.

Straight-Life Annuity: A series of payments that continues only while the recipient is alive.

Straight-Line Depreciation: A method of depreciating an asset by reducing its value in equal amounts each year.

Strategic Plan: A long-term road map for a company, spelling out its financial and operational objectives for the next 3-5 years.

Strip: The practice of dividing a bond into a series of lesser-valued zero-coupon bonds.

Strong Dollar: When the foreign exchange rate results in the U.S. dollar being able to purchase foreign goods more cheaply.

Supply-side Economics: Economic policy that supports reduction in taxes as a means of improving the long-term growth of the economy.

Support Level: Stock drops to a point where institutional investors and mutual funds see a bargain and start scooping up shares, keeping the stock from dropping below that point.

Sweepstakes: A type of contest that encourages participants to purchase a product in order to be considered for free prizes. A lottery, which is illegal, requires a payment for a game of chance. A sweepstakes offers an alternative means of entry, eliminating the cost to play.

Syndicate: A group of individuals who have formed a joint venture to undertake a project they would have been unable to complete individually.

Synergy: A theory that states that businesses or groups merged into a large organization will be more productive and successful than the businesses were individually; the whole is greater than the sum of its parts.