1. Definition A - C
2. Definition D - G
3. Definition H - L
4. Definition M - O
5. Definition P - R
6. Definition S - T
7. Definition U - Z
8. Back to Main
|Stock Glossary - (S - T)
A - C
| D -
G | H - L
| M -
O | P - R
| S -
T | U - Z
- S&P 500 Index
- See Standard
& Poor's 500 Index.
- Salary Reduction Simplified Employee Pension Plan (SARSEP)
- Prior to January 1, 1997, a SEP-IRA could have included a salary
reduction arrangement in which an employee may elect to defer taxation
on part of his or her compensation by contributing that amount to the
SEP. This type of salary reduction plan is known as a SARSEP, and could
have been established by an employer who had fewer than 25 employees
provided at least 50% of all employees agreed to participate in the
arrangement. Like a 401(k) plan, the employee's contribution to the
SARSEP is limited to $10,500 per year. Effective January 1, 1997, no new
SARSEP may be established; however, those in existence as of December
31, 1996, may continue to operate. The SARSEP has been replaced by the
new SIMPLE arrangement discussed below.
- Same-store sales
- Also called comparable-store sales (or simply "comps", same-store
sales measure the percentage change in revenues for all stores in the
chain that have been open more than one year.
- Savings Incentive Match Plan for Employees (SIMPLE)
- Established by the Small Business Protection Act of 1996, a SIMPLE
may be set up by employers who have no other retirement plan and who
have 100 or fewer employees with at least $5,000 in compensation for the
previous year. SIMPLE plans are the replacement for the SARSEP plans
discussed above. They may be structured as an IRA or as a 401(k) plan.
Employees may defer any percentage of compensation up to $6,000 per year
to the SIMPLE, and the employer is required to make a matching
contribution of up to 3% of the employee's pay based on that election.
The employer may reduce the maximum matching percentage in any two years
out of five. Alternatively, the employer may establish a uniform 2% of
salary contribution per year for all eligible employees regardless of
whether they contribute to the SIMPLE or not. Together, the employee and
the employer may contribute a maximum of $12,000 annually to the SIMPLE.
- See Securities
and Exchange Commission.
- Secondary offering
- The sale of a large block of company stock anytime after the initial
public offering. The stock can come from company officials, institutions
with a lot of shares, or the offering company itself in the form of
- A group of companies that have shared characteristics, usually
operating in a common industry.
- Sector fund
- A mutual fund that invests its shareholders' money in a relatively
narrow market sector, e.g., technology, energy, the Internet, or
- A fancy name for shares of stock, bonds, or any kind of financial
asset that can be traded.
- Securities and Exchange Commission (SEC)
- The federal agency charged with ensuring that the U.S. stock market
is a free and open market. All companies with stock registered in the
United States must comply with SEC rules and regulations, which include
filing quarterly reports on how the company is doing. The SEC, headed by
five appointed members, was created under the Securities Exchange Act of
- See Simplified
Employee Pension plan.
- Settlement date
- The date by which a broker must receive payment to satisfy the terms
of a security transaction. The settlement date for stocks is three
business days from the execution of the trade.
- If you buy even one share of stock in a company, you can proudly
call yourself a shareholder. As a shareholder you get an invitation to
the company's annual meeting, and you have the right to vote on the
members of the board of directors and other company matters.
- Short sale
- An investor who sells stock short borrows shares from a brokerage
house and sells them to another buyer. Proceeds from the sale go into
the shorter's account. He must buy those shares back (cover) at some
point in time and return them to the lender. See Fool FAQ: Shorting
- Short squeeze
- When many investors have sold short a stock on the hope that its
price will plunge, that price may begin to rise. As it does so, more and
more of these "shorters" will "cover" their investments. That is,
they'll buy back the shares that they had shorted, and take a loss,
since they're having now to buy the shares at a higher price. As more
and more shorters do this, the price rises (since more people are buying
than selling). In investment parlance, this is a short squeeze.
- Short-term capital gain
- A profit on the sale of a security that has been held for one year
or less. Short-term capital gains are taxed as ordinary income. See Capital Gains Tax
- Short-term reserves
- Investments in U.S. Treasury bills, money market instruments,
interest-bearing bank deposits, or short-term bonds.
- See Savings
Incentive Match Plan for Employees.
- Simplified Employee Pension (SEP) plan
- A SEP is an easy method for a small employer to establish a
retirement plan for employees without the complex administration and
expense found in qualified retirement plans. In fact, an employer may
establish a SEP only if that employer has no qualified retirement plan
in effect. Under a SEP, the employer may make a contribution of up to
the lesser of 15% or $30,000 of compensation to IRAs established in each
- Small-capitalization ("small-cap") fund
- A mutual fund that invests in companies whose market value is less
than about $1 billion.
- Small-capitalization ("small-cap") stocks
- Companies with a market capitalization of $1 billion or less. See Market
- The nickname for S&P 500
Depositary Receipts, which trade on the American Stock Exchange
under the ticker symbol SPY. Spiders are a convenient way for investors
to buy and sell the aggregate stock of the companies represented in the
S&P 500 Index.
- See Stock
split, or What
Are Stock Splits.
- Spousal IRA
- An IRA funded by a married taxpayer in the name of his or her spouse
who has less than $250 in annual compensation. The couple must file a
joint tax return for the year of contribution. The working spouse may
contribute up to $2,000 per year to the Spousal IRA and up to $2,000 per
year to his or her own IRA. A couple, then, may contribute up to $4,000
per year provided neither IRA receives more than $2,000.
- The difference between the bid and ask price, i.e., the highest
price offered and the lowest priced asked for a security.
- Standard & Poor's 500 Index
- An index of 500 of the biggest publicly traded companies in the
United States. The S&P 500 is generally thought of as the best
measurement of the overall U.S. stock market.
- Standard & Poor's MidCap 400 Index
- A market-capitalization-weighted index composed of exactly 400
companies (thus the name) with market values between roughly $200
million and $5 billion.
- An ownership share in a corporation. Each share of stock is a
proportional stake in the corporation's assets and profits, and
purchasing a stock should be thought of as owning a proportional share
of the successes and failures of that business.
- Stock certificate
- A document designating and verifying shareholder ownership in a
- Stock fund
- A mutual fund investing primarily in stocks.
- Stock split
- A stock split simply involves a company altering the number of its
shares outstanding and proportionally adjusting the share price to
compensate. This in NO WAY affects the intrinsic value or past
performance of your investment, if you happen to own shares that are
splitting. A typical example is a 2-for-1 stock split. A company will
announce that it's splitting its stock 2-for-1 in one month. One month
from that date, the company's shares (having traded the day before at,
say, $100) will now be trading at half the price from the previous day
(so they'll open at $50). The company, which had 10 million shares
outstanding, now consequently has 20 million shares outstanding. The
price has been halved in order to accommodate a doubling of the share
- Stock symbol
- See Ticker
- An individual who has been licensed by the National Association of
Securities Dealers to trade stocks and advise clients on various
personal finance issues.
- Street name
- Registration of securities held in the name of the owner's broker to
facilitate share transfers at the time of sale.
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- Taxable equivalent yield
- The return from a higher-paying but taxable investment that would be
equivalent to the return from a tax-free investment. To determine this,
you need to know the tax bracket of the individual paying the taxes on
- Taxable year
- The 12 months used by an individual to report income for income tax
purposes. For most, but not all, this will simply be the calendar year.
- Accounts in which taxes are not paid on investment growth or
earnings until funds are withdrawn from the account, such as an
Individual Retirement Account or a 401(k) plan.
- Tax-deferred retirement plan
- Any retirement plan such as a 401(k) in which earnings are not
- Tax-exempt bond
- A bond -- typically issued by state, county, or municipal
governments -- whose interest payments are not taxed by the federal
government. These bonds may or may not be subject to state and local
- An investment exempt from federal and, in some cases, state or local
- See Treasury
- See Treasury
- Technical analysis
- Technical analysis dwells on charts of stock price movements and
trading volume, as opposed to a company's business, earnings, and
competition. Investors who use technical analysis focus on the
psychology of the market, scrutinizing investor behavior. They try to
determine where the big, institutional money is going so they can put
their cash in the same places. Fools aren't believers in technical
- Term insurance
- A no-nonsense life insurance plan that calls for low annual payments
("premiums") that will increase as you get older. See also Whole life
- Ticker symbol
- An abbreviation for a company's name that is used as shorthand by
stock-quote reporting services and brokerages.
- Top line
- The top line on a business' income statement shows its sales,
otherwise known as revenues.
- The purchase or sale of a stock, bond, or other security.
- Trading range
- The upper and lower selling price of a security over a given time
period, such as the last 52 weeks.
- Traditional IRA
- An Individual Retirement Account in which contributions may be
deductible, non-deductible, or both. See Individual Retirement
- Transaction fee
- A charge assessed by a broker for assisting in the trade of a stock
or other security.
- Treasury bill (T-bill)
- A short-term discounted security issued by the U.S. government, with
a maturity of one year or less.
- Treasury bond (T-bond)
- A long-term security issued by the U.S. government, with a maturity
of 10 years or more.
- Treasury note (T-note)
- An intermediate-term security issued by the U.S. government, having
a maturity of 1 to 10 years.
- Turnover rate
- A measurement of trading activity during the past year. Mutual funds
with lower turnover rates will leave their shareholders with lower tax
bills at the end of the year.
- 12b-1 fee
- Mutual fund promotional expenses such as advertising and public
relations that are paid by shareholders.
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