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Glossary of Investment Terms




Secondary CD


Previously owned, non-callable CD's that an investor has sold prior to maturity. These are being re-offered in the secondary market and can either be more or less than the original cost.




Secondary Market


Exchanges and over-the-counter markets where securities are bought and sold subsequent to original issuance, which took place in the primary market. Proceeds of secondary market sales accrue to the selling dealers and investors, not to the companies that originally issued the securities.




Selling Short


Selling a stock as an opening transaction instead of purchasing stock. The customer must meet certain margin requirements to sell short and the brokerage firm must be able to borrow the stock that the customer wants to sell short.




Settlement Date


Date by which an executed order must be settled, either by a buyer paying for the securities with cash or by a seller delivering the securities and receiving the proceeds of the sale.




Share Class


A fund may offer different classes of shares such as A, B or C. Share classes represent ownership in the same mutual fund. The way the fund is paid for depends on the share class purchased. This allows the client the option to choose the sales charge that best suits his investment needs and objective.




Shelf Registration


The term used for SEC Rule 415, which allows a corporation to comply with registration requirements up to two years prior to a public offering of securities.




Short Against the Box


Selling short stock owned long by the seller in the same account.




Short Position


Stock shares that an individual has sold short and has not covered as of a particular date. Sale of a stock not owned by the seller.




Short Put


A put option grants the right to sell at a specified price a specific number of shares by a certain date. A short put is someone who has sold this right in exchange for a premium. The put option seller (called a writer) hopes the stock will remain stable, rise or drop by an amount less than his or her profit on the premium.




Simplified Employee Pension (SEP) IRA


Pension plan in which both the employee and employer contribute to an IRA.




Sinking Fund


Money accumulated on a regular basis in a separate custodial account that is used to redeem debt securities or preferred stock issues.




Special Memorandum Account (SMA)


A memorandum account of the funds in excess of the margin requirement. The account is maintained essentially so that the broker can gauge how far the customer might be from a margin call.




Stock Certificate


A paper certificate of ownership of a corporation showing the number of shares, name of issuer, amount of par or stated value represented or a declaration of no-par value, and rights of the shareholder. A preferred stock certificate will also list the issuer's responsibilities with respect to dividends and voting rights, if any.




Stock Dividend


A distribution of earnings to shareholders, prorated by class of security and paid in the form of stock not cash.




Stock Split


Increase in a corporation's number of outstanding shares of stock without any change in the shareholder's equity or aggregate market value at the time of the split.




Stop Limit Order


An order to buy or sell at a specified price or better (called the stop-limit price) but only after a given stop price has been reached or passed. For example, an order to buy 100 XYZ 55 Stop 56 Limit, means that if the market price reaches 55 (stop price) or better (in the case of a buy, it would be less than 55) the order is then triggered to execute the order as a limit order at 56 or a better (lower) price. Stop-limit orders avoid some of the risk a stop order has, but like all limit orders, carries the risk of missing the market all together, since the specified limit price or better may never occur.




Stop Order


A stop order is an order to buy or sell a stock once the price of the stock reaches a specified price, known as the stop price. When the specified price is reached, your stop order becomes a market order.




Strike Price


The price at which the holder can buy or sell the underlying security from the writer of the option.




Systematic Redemption


Plan in which investors establish a regular redemption of an existing mutual fund position in order to liquidate it.




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