Here are Finance dictionary terms beginning with S.

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Schatz  a short term German government bond of 2–5 years till maturity.

Secondary Market  the market for buying and selling a security that has already been issued on the primary market.

Securities Exchange Commission (SEC)  a powerful US regulatory body responsible for overseeing US securities markets and investor protection.

Securitization the creation of a security which is backed by a stream of cash  flows from a pool of preexisting assets and receivables or from future prospective cash flows. For example, a CDO may be issued, the payments of which may be financed from mortgage or rental income. The cash flows are managed and placed under the legal control of investors through a special intermediary created for this purpose  known as a “special purpose vehicle” (SPV) or “special purpose entity” (SPE).

Semi-strong market efficiency occurs when current prices of a secuity fully reflect all publicly available information so that excess risk adjusted profits cannot be made by trading on the same information set.

Senior Security  a security such as debt instrument the holder of which must be paid before holders of other junior securities such as equity are paid.

Settlement Date  the date by which a security trade must be settled, that is, the date when a buyer of the security must pay for the security and by which the seller must deliver the security to the buyer.

Settlement Price  the price at which a security is settled. For derivatives, it is an important price since the daily settlement price will determine the amount of variation margin that may be required.

Share  a security that signifies partial ownership of a company, the shareholder has a part claim on the company’s assets and may be paid a dividend from the company’s profits. The value of the share will fluctuate with the company’s performance and prospects.

Short Selling  to sell a bond or share that the seller does not own in the hope that the price will fall and can be bought back at a lower price. Traders are short on a security if they have a negative net position in that security or asset.

Short Squeeze  a situation where there has been heavy short selling of a stock but a price rise means that the short sellers find they have to buy the stock back to cover their losses, but this then forces the price further upwards.

Soft Commodities  coffee, sugar, orange juice, tea etc. non metals.

Sovereign Risk  the risk that a country will default on its debt.

Special Purpose Vehicle (or Entity) a legal entity created by financial institutions that can be used for specific financial transactions such as bundling together assets and the associated cash flows to generate a new security or investment vehicle.

 Spot Market  a market in which the commodity/asset/security is paid for and delivered immediately. Often used in the currency market when talking about the spot exchange rate between one currency and another.

Spread  the difference between the bid and offer rate.

Stag  a person that buys a newly issued share in the hope of selling it quickly after issue at a premium to the price paid for it.

Standard & Poor’s 500 index (S&P500)  an index made up of 500 major US shares which are chosen by market capitalization, liquidity, and industry group. The index is value weighted and calculated on a continuous basis throughout the day. It is one of the most widely watched stock indices in the world.

Stock Split  a process of splitting up a stock into smaller parts normally done to improve liquidity in the share. For example, a $200 share may be split into 5 shares of $40 each in a 5 for 1 stock split. In the UK it is known as scrip issue.

Straddle  an option strategy that involves the simultaneous purchase of call and put options on a share at the same strike price.

Strangle  an option strategy that involves the simultaneous purchase of call and put options on a share at different strike prices.

Strike Price  the price at which an option holder has the right to buy or sell a security.

Structured investment vehicle (SIV) a legal entity that is financed by borrowing short term and invests the borrowed funds in medium to long term securities.

Subordinated Debt  a bond or loan that should a company go into liquidation is less senior to other bonds, the bondholder can only expect payout once the more senior debt holders have been paid. Also known as junior debt.

Sumarai Bond  a yen denominated bond issued in Japan by a foreign entity

Survivorship bias involves the overestimation of returns to a class of investments such as mutual funds or hedge funds due to the considering only funds that survived. The losses due to funds that were not successful and closed down are ignored. in the hedge fund industry it may account for as much as a 3% over-reporting of returns.

Swap  an exchange of cash flow obligations between two parties.

Swaption  an option to do a swap sometime in the future.

Syndicate  a term used to describe a group of financial institutions that underwrite a debt issue or undertake a joint bank loan known as a syndicated bank loan.

Syndicated Bank Loan  a large bank loan made to a borrower by a group of banks. The syndicate is usually led by a lead bank which makes a percentage of the loan itself and then syndicates the rest to the other banks.

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