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Safety-net return The minimum available return that will trigger an immunization strategy in a contingent
immunization strategy.

Sale and lease-back Sale of an existing asset to a financial institution that then leases it back to the user.
Related: lease.

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

Sales forecast A key input to a firm's financial planning process. External sales forecasts are based on
historical experience, statistical analysis, and consideration of various macroeconomic factors.
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Sales-type lease An arrangement whereby a firm leases its own equipment, such as IBM leasing its own
computers, thereby competing with an independent leasing company.

Salvage value Scrap value of plant and equipment.

Samurai bond A yen-denominated bond issued in Tokyo by a non-Japanese borrower. Related: bulldog
bond and Yankee bond.

Samurai market The foreign market in Japan.

Savings and Loan association National- or state-chartered institution that accepts savings deposits and
invests the bulk of the funds thus received in mortgages.

Savings deposits Accounts that pay interest, typically at below-market interest rates, that do not have a
specific maturity, and that usually can be withdrawn upon demand.

SBIC Small Business Investment Company.

Scale A bank that offers to pay different rates of interest on CDs of varying rates is said to "post a scale."
Commercial paper dealers also post scales.

Scale enhancing Describes a project that is in the same risk class as the whole firm.

Scale in When a trader or investor gradually takes a position in a security or market over time.

Scalp To trade for small gains. It normally involves establishing and liquidating a position quickly, usually
within the same day.

Scenario analysis The use of horizon analysis to project bond total returns under different reinvestment rates
and future market yields.

Scheduled cash flows The mortgage principal and interest payments due to be paid under the terms of the
mortgage not including possible prepayments.

Search costs Costs associated with locating a counterparty to a trade, including explicit costs (such as
advertising) and implicit costs (such as the value of time). Related:information costs.

Seasoned datings Extended credit for customers who order goods in periods other than peak seasons.

Seasoned issue Issue of a security for which there is an existing market. Related: Unseasoned issue.

Seasoned new issue A new issue of stock after the company's securities have previously been issued. A
seasoned new issue of common stock can be made by using a cash offer or a rights offer.

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

Second pass regression A cross-sectional regression of portfolio returns on betas. The estimated slope is the
measurement of the reward for bearing systematic risk during the period analyzed.

Secondary issue (1) Procedure for selling blocks of seasoned issues of stocks. (2) More generally, sale of
already issued stock.

Secondary market The market where securities are traded after they are initially offered in the primary
market. Most trading is done in the secondary market. The New York stock Exchange, as well as all other
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stock exchanges, the bond markets, etc., are secondary markets. Seasoned securities are traded in the
secondary market.

Sector Refers to a group of securities that are similar with respect to maturity, type, rating, industry, and/or
coupon.

Section 482 United States Department of Treasury regulations governing transfer prices.

Secured debt Debt that, in the event of default, has first claim on specified assets.

Securities & Exchange Commission The SEC is a federal agency that regulates the U.S.financial markets.

Securities analysts Related:financial analysts

Securitization The process of creating a passthrough, such as the mortgage pass-through security, by which
the pooled assets become standard securities backed by those assets. Also, refers to the replacement of
nonmarketable loans and/or cash flows provided by financial intermediaries with negotiable securities issued
in the public capital markets.

Security Piece of paper that proves ownership of stocks, bonds and other investments.

Security characteristic line A plot of the excess return on a security over the risk-free rate as a function of
the excess return on the market.

Security deposit (initial) Synonymous with the term margin. A cash amount of funds that must be deposited
with the broker for each contract as a guarantee of fulfillment of the futures contract. It is not considered as
part payment or purchase. Related: margin

Security deposit (maintenance)Related:Maintenance margin security market line (SML). A description of
the risk return relationship for individual securities, expressed in a form similar to the capital market line.

Security market line Line representing the relationship between expected return and market risk.

Security market plane A plane that shows the equilibrium between expected return and the beta coefficient
of more than one factor.

Security selection See: security selection decision.

Security selection decision Choosing the particular securities to include in a portfolio.

Self-liquidating loan Loan to finance current assets, The sale of the current assets provides the cash to repay
the loan.

Self-selection Consequence of a contract that induces only one group (e.g. low risk individuals) to participate.

Sell hedge Related: short hedge.

Sell limit order Conditional trading order that indicates that a, security may be sold at the designated price or
higher. Related: buy limit order.

Selling group All banks involved in selling or marketing a new issue of stock or bonds

Selling shortIf an investor thinks the price of a stock is going down, the investor could borrow the stock from
a broker and sell it. Eventually, the investor 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.
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Sell-side analyst Also called a Wall Street analyst, a financial analyst who works for a brokerage firm and
whose recommendations are passed on to the brokerage firm's customers.

Semi-strong form efficiency A form of pricing efficiency where the price of the security fully reflects all
public information (including, but not limited to, historical price and trading patterns). Compare weak form
efficiency and strong form efficiency.

Senior debt Debt that, in the event of bankruptcy, must be repaid before subordinated debt receives any
payment.

SeniorityThe order of repayment. In the event of bankruptcy, senior debt must be repaid before subordinated
debt is repaid.

Sensitivity analysis Analysis of the effect on a project's profitability due to changes in sales, cost, and so on.

Separation property The property that portfolio choice can be separated into two independent tasks: 1)
determination of the optimal risky portfolio, which is a purely technical problem, and 2) the personal choice
of the best mix of the risky portfolio and the risk-free asset.

Separation theoremThe value of an investment to an individual is not dependent on consumption
preferences. All investors will want to accept or reject the same investment projects by using the NPV rule,
regardless of personal preference.

Serial bonds Corporate bonds arranged so that specified principal amounts become due on specified dates.
Related: term bonds.

Serial covariance The covariance between a variable and the lagged value of the variable; the same as
autocovariance.

Series bond Bond that may be issued in several series under the same indenture.

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.

Set of contracts perspective View of corporation as a set of contracting relationships, among individuals
who have conflicting objectives, such as shareholders or managers. The corporation is a legal contrivance that
serves as the nexus for the contracting relationships.

Settlement When payment is made for a trade.

Settlement date The date on which payment is made to settle a trade. For stocks traded on US exchanges,
settlement is currently 3 business days after the trade. 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.

Settlement price A figure determined by the closing range which is used to calculate gains and losses in
futures market accounts. Settlement prices are used to determine gains, losses, margin calls, and invoice
prices for deliveries. Related: closing range.

Settlement rate The rate suggested in Financial Accounting Standard Board (FASB) 87 for discounting the
obligations of a pension plan. The rate at which the pension benefits could be effectively settled off the
pension plan wished to terminate its pension obligation.

Seykota, Ed Ed Seykota is interviewed by Jack Schwager in Schwager's book, Market Wizards. Seykota was
graduated from MIT in the early 1970s, and went on to develop the first commercially sold commodities
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trading system. Seykota went into business for himself, and in the years 1974-1989, managed to grow a
$5,000 trading account to over $15 million dollars. Mr. Seykota is a trading genius who has been able to
identify robust patterns of price action that repeat themselves in different markets. His quantitative and
systematic approach to trading has been an inspiration for many. Mr. Seykota is also a genius when it comes
to understanding human psychology.

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.

Shareholders' equity This is a company's total assets minus total liabilities. A company's net worth is the
same thing.

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.
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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.

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.

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