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Securities Association of China
State Administration of Foreign Exchange
The storage and protection of customers' securities, typically held in a vault, provided as a service by a bank or institution acting as agent for the customer.
Safety stock
A level of inventory beyond anticipated needs that provides a cushion in the event that it takes longer to replenish inventory than expected or in the case of greater than expected demand.
Safety-first rules
Rules for portfolio selection that focus on the risk that portfolio value will fall below some minimum acceptable level over some time horizon.
Generally, a synonym for revenue; “sales” is generally understood to refer to the sale of goods, whereas “revenue” is understood to include the sale of goods or services.
Sales returns and allowances
An offset to revenue reflecting any cash refunds, credits on account, and discounts from sales prices given to customers who purchased defective or unsatisfactory items.
Sales risk
Uncertainty with respect to the quantity of goods and services that a company is able to sell and the price it is able to achieve; the risk related to the uncertainty of revenues.
Sales-type lease
A type of finance lease, from a lessor perspective, where the present value of the lease payments (lease receivable) exceeds the carrying value of the leased asset. The revenues earned by the lessor are operating (the profit on the sale) and financing (interest) in nature.
Salvage value
The amount the company estimates that it can sell the asset for at the end of its useful life.
A subset of a population.
Sample estimator 
A formula for assigning a unique value (a point estimate) to a population parameter.
Sample excess kurtosis
A sample measure of the degree of a distribution’s peakedness in excess of the normal distribution’s peakedness.
Sample kurtosis
A sample measure of the degree of a distribution’s peakedness.
Sample mean
The sum of the sample observations divided by the sample size.
Sample selection bias
Bias introduced by systematically excluding some members of the population according to a particular attribute—for example, the bias introduced when data availability leads to certain observations being excluded from the analysis.
Sample skewness
A sample measure of degree of asymmetry of a distribution.
Sample standard deviation
The positive square root of the sample variance.
Sample statistic
A quantity computed from or used to describe a sample. Synonyms: statistic
Sample variance
A sample measure of the degree of dispersion of a distribution, calculated by dividing the sum of the squared deviations from the sample mean by the sample size (n) minus 1.
The process of obtaining a sample.
Sampling distribution
The distribution of all distinct possible values that a statistic can assume when computed from samples of the same size randomly drawn from the same population.
Sampling error
The difference between the observed value of a statistic and the quantity it is intended to estimate.
Sampling plan
The set of rules used to select a sample.
Sandwich spread
An option strategy that is equivalent to a short butterfly spread.
Sarbanes–Oxley Act
An act passed by the U.S. Congress in 2002 that created the Public Company Accounting Oversight Board (PCAOB) to oversee auditors.
Savings–investment imbalances forecasting approach
An exchange rate forecasting approach that explains currency movements in terms of the effects of domestic savings–investment imbalances on the exchange rate.
Scaled earnings surprise
Unexpected earnings divided by the standard deviation of analysts’ earnings forecasts.
A trader who offers to buy or sell futures contracts, holding the position for only a brief period of time. Scalpers attempt to profit by buying at the bid price and selling at the higher ask price.
Scatter plot
A two-dimensional plot of pairs of observations on two data series.
Scenario analysis
Analysis that shows the changes in key financial quantities that result from given (economic) events, such as the loss of customers, the loss of a supply source, or a catastrophic event; a risk management technique involving examination of the performance of a portfolio under specified situations. Closely related to stress testing.
The application of a set of criteria to reduce a set of potential investments to a smaller set having certain desired characteristics.
Memberships in a derivatives exchange.
US Senate Banking Committee
Listing by maturity of the price or yields at which a new issue will be offered. consensus scale—In a negotiated issue, the very early price indications. preliminary scale—Initial prices and yields, before a bid is submitted. final scale—Scale that is submitted to the issuer at the time of the sale. reoffering scale—Scale offered to the investor by the underwriter who has purchased bonds. Also called the winning scale.
Scenario analysis
An analysis examining the likely performance of an investment under a wide range of possible interest rate environments.
State Council Securities Commission
The age of accounts. In the ABS market, this term refers to the fact that various asset types have different seasoning patterns, which are characterized by periods of rising and then declining losses.
Securities and Exchange Board of India
US Securities and Exchange Commission
Secondary market
Market for issues previously offered or sold.
Secondary offering
An offering after the initial public offering of securities.
Sector neutral
Said of a portfolio for which economic sectors are represented in the same proportions as in the benchmark using market-value weights.
Sector neutralizing
Measure of financial reporting quality by subtracting the mean or median ratio for a given sector group from a given company’s ratio.
Sector rotation strategy
A type of top-down investing approach that involves emphasizing different economic sectors based on considerations such as macroeconomic forecasts.
Sector/quality effect
In a fixed-income attribution analysis, a measure of a manager’s ability to select the “right” issuing sector and quality group.
Securities Act of 1933
An act passed by the U.S. Congress in 1933 that specifies the financial and other significant information that investors must receive when securities are sold, prohibits misrepresentations, and requires initial registration of all public issuances of securities.
Securities Exchange Act of 1934
An act passed by the U.S. Congress in 1934 that created the Securities and Exchange Commission (SEC), gave the SEC authority over all aspects of the securities industry, and empowered the SEC to require periodic reporting by companies with publicly traded securities.
Securities offering
A merger or acquisition in which target shareholders are to receive shares of the acquirer’s common stock as compensation.
Security market line
The graph of the capital asset pricing model. Synonyms: SML
Security selection 
Skill in selecting individual securities within an asset class.
Section 501(c)(3)
The section of the US Internal Revenue Code under which not-for-profit organizations receive their tax-exempt status
The grouping of securities into a category, based upon similarities that they share. Typically, securities found in a distinct industry are grouped together.
Secured bond
Debt backed by specific assets or revenues of the borrower. In the event of default, secured lenders can force the sale of such assets to meet their claims.
Securitization may be broadly defined as the process of issuing new securities backed by a pool of existing assets such as loans, residential or commercial mortgages, credit card debt, or other assets. These securities, which are generally referred to as “mortgage or asset-backed securities” are issued and sold to investors (principally institutions) and the cash flows or economic values following the assets are redirected to them. Securitization includes a diverse array of assets, such as residential and commercial mortgage loans, trade receivables, credit card balances, consumer loans, lease receivables, automobile loans, insurance receivables, commercial bank loans, health care receivables, obligations of purchasers to natural gas producers, future rights to entertainment royalty payments and other consumer and business receivables.
Collateral pledged by a bond issuer (debtor) to an investor (lender) to secure repayment of the loan.
Security selection effect
In a fixed-income attribution analysis, the residual of the security’s total return after other effects are accounted for; a measure of the return due to ability in security selection.
Segment debt ratio
Segment liabilities divided by segment assets.
Segment margin
Segment profit (loss) divided by segment revenue.
Segment ROA
Segment profit (loss) divided by segment assets.
Segment turnover
Segment revenue divided by segment assets.
With respect to the management of insurance company portfolios, the notional subdivision of the overall portfolio into subportfolios each of which is associated with a specified group of insurance contracts.
Sell side
Broker/dealers that sell securities and make recommendations for various customers, such as investment managers and institutional investors.
Sell-side analysts
Analysts employed by brokerages.
Semi active approach
An investment approach that seeks positive alpha while keeping tight control over risk relative to the portfolio’s benchmark. Synonyms: risk-controlled active enhanced index approach
Semi active management
A variant of active management. In a semi active portfolio, the manager seeks to outperform a given benchmark with tightly controlled risk relative to the benchmark. Synonyms: enhanced indexing risk-controlled active management
Selling group
A selling group includes dealers or brokers who have been asked to join in the offering of a new issue of securities, but are neither liable for any unsold syndicate balance, nor share in the profits of the overall syndicate. They obtain securities for sale less the take-down.
Semi deviation
The positive square root of semi variance (sometimes called semi standard deviation).
Semi logarithmic
Describes a scale constructed so that equal intervals on the vertical scale represent equal rates of change, and equal intervals on the horizontal scale represent equal amounts of change.
Semi variance
The average squared deviation below the mean.
Sensitivity analysis
Analysis that shows the range of possible outcomes as specific assumptions are changed.
Serially correlated
With reference to regression errors, errors that are correlated across observations.
Service period
The period benefited by the employee’s service, usually the period between the grant date and the vesting date.
Settlement date
The date on which the parties to a swap make payments. Synonyms: payment date
Related Terms: Swap
Settlement netting risk
The risk that a liquidator of a counterparty in default could challenge a netting arrangement so that profitable transactions are realized for the benefit of creditors.
Settlement period
The time between settlement dates.
Settlement price
The official price, designated by the clearinghouse, from which daily gains and losses will be determined and marked to market.
Senior bonds
Bonds and other debt obligations, fixed-rate capital securities and preferred stock that are considered senior to common stock within an entity’s capitalization structure and therefore have a higher priority to repayment than another bond's claim to the same class of assets.
Senior manager
The underwriter who coordinates the sale of a bond or note issue and manages a syndicate or selling group. A senior manager is usually used only with regard to a negotiated financing. The senior manager will “run the books.” If other securities firms share in the management responsibilities, they may be called co-senior managers, or, to a lesser extent, co-managers.
Sequential-pay CMO
The most basic type of CMO. All tranches receive regular interest payments, but principal payments are directed initially only to the first tranche until it is completely retired. Once the first tranche is retired, the principal payments are applied to the second tranche until it is fully retired, and so on. Also known as 'plain vanilla' or 'clean' CMO.
Serial bonds
All or a portion of an issue with stated maturities in consecutive years (as opposed to mandatory sinking fund redemption amounts).
Series EE Savings Bonds
Series EE bonds are safe low risk savings bonds issued by U.S. Treasury. Series EE bonds issued after April 2005 earn a fixed interest rate based on 10-year Treasury note market yields that is set each May 1 and November 1. Series EE bonds issued from May 1997 to April 2005 accrued interest according to a floating rate (90% of the average market yields on 5-year Treasury securities for the previous six months). The holder doesn't receive the interest until the bonds are cashed in. If the bonds are redeemed less than five years from the time they are purchased, the holder must sacrifice three-months' interest. The Treasury guarantees that Series EE bonds will mature at full face value in no more than 17 years. If you want to hold them longer, they will continue to accrue interest for 30 years.
Series I Savings Bonds
Series I savings bonds have a built-in inflation adjustment. They are issued in the same denominations as Series EE bonds but pay interest according to an earning rate that is partly a fixed rate of return and partly adjusted for inflation. Interest, if any, is added to the bond monthly and is paid when the bond is redeemed. These bonds can now be issued electronically.
The collection and pooling of principal, interest and escrow payments on mortgage loans and mortgage pools; accounting, bookkeeping, insurance, tax records, loan payment follow-up, delinquency loan follow-up and loan analysis. The party providing the servicing receives a fee, the servicing fee, as compensation.
Servicing fee
The amount retained by the mortgage servicer from monthly interest payments made on a mortgage loan.
Settlement date
The date for the delivery of bonds and payment of funds agreed to in a transaction.
Settlement risk
When settling a contract, the risk that one party could be in the process of paying the counterparty while the counterparty is declaring bankruptcy.
A share is a unit of ownership in a corporation, or a mutual fund or an interest in a partnership. In the US, the term stock is often used instead of share, although an investor actually owns shares of stock.
An individual or institution who owns stock in a company.
Share repurchase
A transaction in which a company buys back its own shares. Unlike stock dividends and stock splits, share repurchases use corporate cash.
Shareholders’ equity

Total assets minus total liabilities.
Shariah-Compliant Funds
are funds compliant with Shariah princples.  They have expanded in popularity recently, even though the concept was first developed in the late 1960s. The concept requires considerable effort to implement, since much attention must be paid to compliance with the Shariah principles, both at the fund operations level and for all underlying investments. Shariah-Compliant funds are prohibited from investing in companies which derives income from the sales of alcohol, pork products, pornography, gambling, military equipment or weapons. Shariah allows for a small portion of an investment's income to come from prohibited sources, though a Shariah-Compliant fund cannot profit from this income. Instead, it must separately account for these earnings and donate them to a charity.
Shark repellents
  A pre-offer takeover defense mechanism involving the corporate charter (e.g., staggered boards of directors and supermajority provisions).
Sharpe ratio
The average return in excess of the risk-free rate divided by the standard deviation of return; a measure of the average excess return earned per unit of standard deviation of return.
The seller of a derivative contract. Also refers to the position of being short a derivative.
Borrowing and then selling securities that one does not own, in anticipation of a price decline. When prices fall, the short is “covered” by buying the securities back and returning them to the lender.
Shortfall risk
The risk that portfolio value will fall below some minimum acceptable level over some time horizon.
Short-term debt
Generally, debt which matures in one year or less. However, certain securities that mature in up to three years may be considered short-term debt.
Shrinkage estimation
Estimation that involves taking a weighted average of a historical estimate of a parameter and some other parameter estimate, where the weights reflect the analyst’s relative belief in the estimates.
Shrinkage estimator
The formula used in shrinkage estimation of a parameter.
Sign-constrained optimization
An optimization that constrains asset class weights to be nonnegative and to sum to 1.
Simple interest
The interest earned each period on the original investment; interest calculated on the principal only.
Simple random sample
A subset of a larger population created in such a way that each element of the population has an equal probability of being selected to the subset.
Simple random sampling
The procedure of drawing a sample to satisfy the definition of a simple random sample.
Computer-generated sensitivity or scenario analysis that is based on probability models for the factors that drive outcomes.
Simulation trial
A complete pass through the steps of a simulation.
Single-payment loan
A loan in which the borrower receives a sum of money at the start and pays back the entire amount with interest in a single payment at maturity.
Single-step format
With respect to the format of the income statement, a format that does not subtotal for gross profit (revenue minus cost of goods sold).
Situational profiling
The categorization of individual investors by stage of life or by economic circumstance.
Not symmetrical.
A quantitative measure of skew (lack of symmetry); a synonym of skew.
Single monthly mortality (SMM)
The percentage of outstanding mortgage loan principal that prepays in one month.
A bond with a sinking fund.
Sinking fund
Separate accumulation of cash or investments (including earnings on investments) in a fund in accordance with the terms of a trust agreement or indenture, funded by periodic deposits by the issuer (or other entity responsible for debt service), for the purpose of assuring timely availability of moneys for payment of debt service. Usually used in connection with term bonds. Bonds with such a feature are known as "sinkers."
Securities Investor Protection Act
Securities Investor Protection Corporation
Smart routing 
The use of algorithms to intelligently route an order to the most liquid venue.
Smoothing rule 
With respect to spending rates, a rule that averages asset values over a period of time in order to dampen the spending rate’s response to asset value fluctuation.
Socially responsible investing
An approach to investing that integrates ethical values and societal concerns with investment decisions.  Synonyms: ethical investing
Soft dollars
The use of commissions to buy services other than execution services. Synonyms: soft dollar arrangements soft commissions
Sole proprietorship
A business owned and operated by a single person.
With respect to financial statement analysis, the ability of a company to fulfill its long-term obligations.
Solvency ratios
Ratios that measure a company’s ability to meet its long-term obligations.
Sortino ratio 
A performance appraisal ratio that replaces standard deviation in the Sharpe ratio with downside deviation.
Sovereign risk
A form of credit risk in which the borrower is the government of a sovereign nation.
Sovereign yield spread
An estimate of the country spread (country equity premium) for a developing nation that is based on a comparison of bond yields in country being analyzed and a developed country. The sovereign yield spread is the difference between a government bond yield in the country being analyzed, denominated in the currency of the developed country, and the Treasury bond yield on a similar maturity bond in the developed country.
Small to Medium Enterprise.  According to the European Union definition, medium is less than 250 headcount, but more than 50 and annual turnover of Euro 50 million to 10 million.  Small is headcount of 50 to ten and turnover of Euro 10 million to 2 million.
Sovereign risk
The risk that the government in the country where the bonds are issued will take actions that will hurt the bond's value.
Spearman rank correlation coefficient
A measure of correlation applied to ranked data.
Special purpose entity
A nonoperating entity created to carry out a specified purpose, such as leasing assets or securitizing receivables; can be a corporation, partnership, trust, limited liability, or partnership formed to facilitate a specific type of business activity. Synonyms: special purpose vehicle variable interest entity
Specific identification method
An inventory accounting method that identifies which specific inventory items were sold and which remained in inventory to be carried over to later periods.
A form of restructuring in which shareholders of the parent company receive a proportional number of shares in a new, separate entity; shareholders end up owning stock in two different companies where there used to be one.
A form of restructuring in which shareholders of the parent company are given shares in a newly created entity in exchange for their shares of the parent company.
In reference to corporate taxes, a split-rate system taxes earnings to be distributed as dividends at a different rate than earnings to be retained. Corporate profits distributed as dividends are taxed at a lower rate than those retained in the business.
Spontaneous investors 
Investors who constantly readjust their portfolio allocations and holdings.
Spot return
The component of the return on a commodity futures contract that comes from changes in the underlying spot prices via the cost of carry model.  Synonyms: price return
An option strategy involving the purchase of one option and sale of another option that is identical to the first in all respects except in either exercise price or expiration.
Spread duration
The sensitivity of a non-Treasury security’s price to a widening or narrowing of the spread over Treasuries.
Spread risk
Risk related to changes in the spread between Treasuries and non-Treasuries.
Spreadsheet modeling
The use of a spreadsheet in executing a dividend discount model valuation or other present value model valuation.
Spurious correlation
A correlation that misleadingly points towards associations between variables.
Stack and roll
A hedging strategy in which an existing stack hedge with maturing futures contracts is replaced by a new stack hedge with longer dated futures contracts.
Stack hedge
Hedging a stream of obligations by entering futures contracts with a single maturity, with the number of contracts selected so that changes in the present value of the future obligations are offset by changes in the value of this “stack” of futures contracts.
Stale price bias
Bias that arises from using prices that are stale because of infrequent trading.
Standard cost
With respect to inventory accounting, the planned or target unit cost of inventory items or services.
Standard deviation
The positive square root of the variance; a measure of dispersion in the same units as the original data.
Standard normal distribution
The normal density with mean (m) equal to 0 and standard deviation (σ) equal to 1. Synonyms: unit normal distribution
Standardized beta
With reference to fundamental factor models, the value of the attribute for an asset minus the average value of the attribute across all stocks divided by the standard deviation of the attribute across all stocks.
Special Meeting
 A convention of shareholders that occurs in addition to the required annual meeting, usually to vote on special proposals.
Special tax bond
A bond secured by a special tax, such as a gasoline tax
Special-purpose vehicle (SPV)
A bankruptcy-remote entity set up to insulate the issuer of ABS (the trust) from the sponsor, or originator, of the assets. Also called special-purpose corporation (SPC).
An investment firm that organizes a unit investment trust and offers the units for sale.
When buying or selling a bond through a brokerage firm, an individual investor will be charged a commission or spread, which is the difference between the market price and cost of purchase, and sometimes a service fee. Spreads differ based on several factors including liquidity.
Spread to Treasury
The difference between yield on a fixed-income security and the yield on a Treasury security of comparable maturity. For example, the spread between a 10-year Treasury yielding 4.75% and a 10-year corporate yielding 5.25% is 50 basis points
Supervisory Review and Evaluation Process
Standardized unexpected earnings
Unexpected earnings per share divided by the standard deviation of unexpected earnings per share over a specified prior time period. Synonyms: SUE
A transformation that involves subtracting the mean and dividing the result by the standard deviation.
Stated annual interest rate
A quoted interest rate that does not account for compounding within the year. Synonyms: quoted interest rate
Stated rate
The rate at which periodic interest payments are calculated. Synonyms: nominal rate coupon rate
Stated return desire 
A stated desired level of returns.
Statement of cash flows
A financial statement that reconciles beginning-of-period and end-of-period balance sheet values of cash; provides information about an entity’s cash inflows and cash outflows as they pertain to operating, investing, and financing activities. Synonyms: cash flow statement
Statement of changes in shareholders’ equity
A financial statement that reconciles the beginning-of-period and end-of-period balance sheet values of shareholders’ equity; provides information about all factors affecting shareholders’ equity. Synonyms: statement of owners’ equity
Statement of retained earnings
A financial statement that reconciles beginning-of-period and end-of-period balance sheet values of retained income; shows the linkage between the balance sheet and income statement.
Static approach
With respect to strategic asset allocation, an approach that does not account for links between optimal decisions in future time periods.
Stated maturity
The last possible date on which the last payment of the longest loan may be paid.
Static trade-off theory of capital structure
A theory pertaining to a company’s optimal capital structure; the optimal level of debt is found at the point where additional debt would cause the costs of financial distress to increase by a greater amount than the benefit of the additional tax shield.
A series of data for which the parameters that describe a return-generating process are stable.
A quantity computed from or used to describe a sample of data.
Statistical factor models
A multifactor model in which statistical methods are applied to a set of historical returns to determine portfolios that best explain either historical return covariances or variances.
Statistical inference
Making forecasts, estimates, or judgments about a larger group from a smaller group actually observed; using a sample statistic to infer the value of an unknown population parameter.
Statistically significant
A result indicating that the null hypothesis can be rejected; with reference to an estimated regression coefficient, frequently understood to mean a result indicating that the corresponding population regression coefficient is different from 0.
The science of describing, analyzing, and drawing conclusions from data; also, a collection of numerical data.
Status quo trap 
The tendency for forecasts to perpetuate recent observations—that is, to predict no change from the recent past.
Statutory merger
A merger in which one company ceases to exist as an identifiable entity and all its assets and liabilities become part of a purchasing company.
Sterling ratio
The compound annualized rate of return over a specified time period divided by the average yearly maximum drawdown over the same time period less an arbitrary 10 percent.
Stock companies 
With respect to insurance companies, companies that have issued common equity shares.
Stock grants
The granting of stock to employees as a form of compensation.
Stock index futures 
Futures contracts on a specified stock index.
Stock options
The granting of stock options to employees as a form of compensation. Synonyms: stock option grants
Stock purchase
An acquisition in which the acquirer gives the target company’s shareholders some combination of cash and securities in exchange for shares of the target company’s stock.
Stock-out losses
Profits lost from not having sufficient inventory on hand to satisfy demand.
Storage costs
The costs of holding an asset, generally a function of the physical characteristics of the underlying asset.
An option strategy involving the purchase of a put and a call with the same exercise price. A straddle is based on the expectation of high volatility of the underlying.
Straight-line method
A depreciation method that allocates evenly the cost of a long-lived asset less its estimated residual value over the estimated useful life of the asset.
Straight-through processing 
Systems that simplify transaction processing through the minimization of manual and/or duplicative intervention in the process from trade placement to settlement.
A variation of a straddle in which the put and call have different exercise prices.
An option strategy involving the purchase of two calls and one put.
Strategic asset allocation
1) The process of allocating money to IPS-permissible asset classes that integrates the investor’s return objectives, risk tolerance, and investment constraints with long-run capital market expectations. 2) The result of the above process, also known as the policy portfolio.
Stratified random sampling
A procedure by which a population is divided into subpopulations (strata) based on one or more classification criteria. Simple random samples are then drawn from each stratum in sizes proportional to the relative size of each stratum in the population. These samples are then pooled.
Stratified sampling
A sampling method that guarantees that subpopulations of interest are represented in the sample.
Street Name
Securities which are registered in the name of a brokerage firm or bank on behalf of a customer.
Stress testing
A set of techniques for estimating losses in extremely unfavorable combinations of events or scenarios.
Strike spread 
A spread used to determine the strike price for the payoff of a credit option.
An option strategy involving the purchase of two puts and one call.
Separate Trading of Registered Interest and Principal of Securities. The Treasury Department’s program under which eligible securities are authorized to be separated into principal and interest components, and transferred separately. These components are maintained in book-entry accounts and transferred in TRADES (Treasury/Reserve Automated Debt Entry System).
Strip hedge
Hedging a stream of obligations by offsetting each individual obligation with a futures contract matching the maturity and quantity of the obligation.
Structural level of unemployment
The level of unemployment resulting from the scarcity of a factor of production.
Structured note
A variation of a floating-rate note that has some type of unusual characteristic, such as a leverage factor or in which the rate moves opposite to interest rates.
Structured products
Many different types of products are “structured” to some extent. “Structuring” usually refers to any type of obligation that is not a straightforward secured or unsecured government or corporate obligation. Although these types of transactions are usually issued through special purpose vehicles, this is not always the case. For example, securitizations are one type of structured product. Another type of structured product refers to a packaging or repackaging of bonds together with various types of interest rate swaps and/or credit derivatives to change the interest and principal payment stream, in order to provide an investor with a particular risk profile that they want. In some cases, these products are also called “structured credit” if they involve products with some type of corporate or asset-related credit risks. Due to the complexity of structured products, they are rarely part of traditional retail investor portfolios or fund offerings.
Style drift
Inconsistency in style.
Style index
A securities index intended to reflect the average returns to a given style.
Stylized scenario
A type of analysis often used in stress testing. It involves simulating the movement in at least one interest rate, exchange rate, stock price, or commodity price relevant to the portfolio.
Subjective probability
A probability drawing on personal or subjective judgment.
Subordinated bond
A type of debt that places the investor in a lien position behind or subordinated to a company’s primary creditors. Bonds issued as subordinated debt will pay interest and principal but only after all interest that is due and payable has been paid on any and all senior debt.
Subsidiary merger
A merger in which the company being purchased becomes a subsidiary of the purchaser.
Sunk cost
A cost that has already been incurred.
Sunshine trades 
Public display of a transaction (usually high-volume) in advance of the actual order.
Supernormal growth
Above average or abnormally high growth rate in earnings per share.
The difference between the value of assets and the present value of liabilities. With respect to an insurance company, the net difference between the total assets and total liabilities (equivalent to policyholders’ surplus for a mutual insurance company and stockholders’ equity for a stock company).
Super PO
A principal-only security structured as a companion bond.
A floating-rate CMO tranche whose rate is based on a formulaic relationship to a representative interest rate index.
Support tranche
A CMO tranche that absorbs a higher level of the impact of collateral prepayment variability in order to stabilize the principal payment schedule for a PAC or TAC tranche in the same offering. Also known as a "companion tranche."
Surety bond
A bond that backs the performance of another. In the ABS market, a surety bond is an insurance policy typically provided by a rated and regulated monoline insurance company to guarantee securities holders against default.
Surplus efficient frontier 
The graph of the set of portfolios that maximize expected surplus for given levels of standard deviation of surplus.
The actual value of a variable minus its predicted (or expected) value.
Survey approach
An estimate of the equity risk premium that is based upon estimates provided by a panel of finance experts.
Survivorship bias 
The bias resulting from a test design that fails to account for companies that have gone bankrupt, merged, or are otherwise no longer reported in a database.
Sustainable growth rate
The rate of dividend (and earnings) growth that can be sustained over time for a given level of return on equity, keeping the capital structure constant and without issuing additional common stock.
An agreement between two parties to exchange a series of future cash flows.
Swap rate 
The interest rate applicable to the pay-fixed-rate side of an interest rate swap.
Swap spread
The difference between the fixed rate on an interest rate swap and the rate on a Treasury note with equivalent maturity; it reflects the general level of credit risk in the market.
Swap tenor 
The lifetime of a swap.
Swap term
Another name for swap tenor.
A transaction in which an investor sells one security and simultaneously buys another with the proceeds, usually for about the same price and frequently for tax purposes.
An option to enter into a swap.
Symmetric cash flow matching
A cash flow matching technique that allows cash flows occurring both before and after the liability date to be used to meet a liability; allows for the short-term borrowing of funds to satisfy a liability prior to the liability due date.
Synthetic call
The combination of puts, the underlying, and risk-free bonds that replicates a call option.
Synthetic forward contract
The combination of the underlying, puts, calls, and risk-free bonds that replicates a forward contract.
Synthetic index fund
An index fund position created by combining risk-free bonds and futures on the desired index.
Synthetic put
The combination of calls, the underlying, and risk-free bonds that replicates a put option.
Systematic factors
Factors that affect the average returns of a large number of different assets.
Systematic sampling
A procedure of selecting every kth member until reaching a sample of the desired size. The sample that results from this procedure should be approximately random.
A group of underwriters formed for the purpose of participating jointly in the initial public offering of a new issue of municipal securities. The terms under which a “syndicate” is formed and operates are typically set forth in an “agreement among underwriters.” One or more underwriters will act as manager of the “syndicate” and one of the managers will act as lead manager and “run the books.” A “syndicate” is also often referred to as an “account” or “underwriting account."
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