S- Corporation – A non-taxable business with one (1) hundred or fewer stockholders. Income is taxed at the individual stockholder’s tax rates instead of the corporate tax rate.
Sale – The completed contract to sell/dispose of a security for value.
Sales Charge – The percentage of the public offering price (POP) that an investor pays to buy mutual fund shares. They can be up-front or upon redemption (back-end sales charge).
Securities and Exchange Commission (SEC) – The regulatory authority of the securities industry which is responsible for interpreting, supervising, and enforcing compliance with the provisions of the securities acts.
Second/Secondary Market – Consists of the first, second, third, and fourth markets. It is a collective term for the exchange and over-the-counter markets in which securities trade after they are issued to the public.
Secondary Offering – Also called secondary distribution. The sale of previously issued securities in which the proceeds go to the selling shareholders and not to the issuer.
Securities Act of 1933 – The federal regulation aimed to help avoid manipulation and fraud of new issues. It requires new issues to be registered with the Securities and Exchange Commission (SEC) and sold with a prospectus.
Securities and Exchange Act of 1934 – The federal regulation aimed to help avoid manipulation and fraud in the trading (secondary) market. Among other provisions, it requires registration and self-regulation of exchanges under Securities and Exchange Commission (SEC) oversight, member firms, and their employees.
Securities Investor Protection Corporation (SIPC) – A non-profit organization created by Congress that insures customer accounts against loss if a broker/dealer fails. Coverage is limited to five (5) hundred thousand dollars with $100,000 for claims for cash. Explanatory brochure available upon request or at www.SIPC.org.
Security – An investment in a common enterprise for profit with management provided by a third party. A contract that can be assigned value and traded.
Share Certificate – A certificate showing an equity ownership of a company.
Sharp Ratio – A risk measurement that compares the extra return achieved for the extra risk assumed by choosing a given investment.
Short Sale – The sale of borrowed securities with the intention to buy the securities at a later date for a lower price and replacing the borrowed securities.
Small Cap – Any company whose outstanding market capitalization is typically between (3) hundred million and two (2) billion.
Sole Proprietorship – An unincorporated business that is owned by only one (1) individual.
Solicitor – An individual used by a business such as an investment advisor for soliciting new clients.
Spread – The difference between any two (2) prices, mainly the current bid and the current ask prices for securities.
Standard and Poor’s 400 Index – An index that measures the performance of four (4) hundred companies with market capitalization between two (2) billion and ten (10) billion. Also known as the mid-cap index.
Standard and Poor’s 500 Index – A weighted index that includes the largest issues that trade on the New York Stock Exchange. It is one of the most commonly used benchmarks for the overall United States (US) stock market.
Standard Deviation – A statistical measure of the variability of returns from an investment.
Stated Yield – The stated rate of interest as a percentage of face value that is paid on a fixed income security. Also known as coupon rate or nominal yield.
Stock – A negotiable security representing ownership of a company and entitling the owner to receive dividends.
Stock Dividend – Additional Shares of stock instead of cash given as a dividend to shareholders.
Stock Index Fund – A mutual fund that invests in a group of securities chosen to match the composition and weighting of a particular stock market index such as the Standard and Poor’s 500 Index.
Stock Specific Risk – Referred to as “putting to many eggs in one basket”. The risk that comes with investing too much money in a single security. This is also known as non-systematic risk.
Stock Split – The typical result when a stock’s price increases to a very high level. The price of the stock is split to bring the price down to a more accessible level and the current shares are increased. Thus, the current shareholders end up with more shares at a lower price per share. The value of the shareholder’s holding remains the same.
Syndicate – A group of investment banking firms that share responsibility and liability for offering and selling new issues to the public.
Syndicate Agreement – Also called the agreement among underwriters. It is a legal agreement between the syndicate manager and each syndicate member that details the selling responsibility and liability of each syndicate member in the underwriting of a new issue security.
Systematic Risk – The risk that a decline in the overall market will adversely affect the value of an investment/portfolio. Also known as market risk and cannot be diversified away.