Financial Terms and Definitions » S

Sawback

ashivapu — Fri, 13 Nov 2009 19:11:04 +0000

Slang term for the U.S. ten dollar paper currency. No related posts. No related posts.

Subprime Mortgage

ashivapu — Tue, 20 Oct 2009 21:36:47 +0000

A class of mortgage used by borrowers with low credit ratings. Often referenced as a major reason for the recent housing crisis.

Borrowers who use subprime loans generally do not qualify for loans with lower rates because they have damaged credit or no credit history, and are thus considered risky by lending agencies. Because the default risk for poor credit borrowers is greater than of other borrowers, lenders charge a higher interest rate on subprime loans.

Stock Dilution

ashivapu — Thu, 08 Oct 2009 19:29:00 +0000

Refers to a company issuing additional common shares. Stock dilution usually results in a price drop of the specific stock. Related posts:Stock Split Common Stock Preferred Stock Related posts:

Short Selling

ashivapu — Sat, 03 Oct 2009 23:25:05 +0000

Short selling is the practice of borrowing shares in the hope that the you will have to pay back the shares at a lower price; thus profiting the difference.

Unlike the normal buying of stocks, short selling allows you to profit of a stock’s price going down; however, risk is technically infinite because you are borrowing shares, required to pay back those shares, and there is no ceiling on how high a stock’s price can go.

Example: Trader A believes Stock X should go from $20 to $15. By short selling, Trader A borrows shares from his stock brokerage at $20 in hopes of paying back those shares at $15. If Trader A borrowed 100 shares then he would have made a $500 profit ($2000 – $1500) from that $5 dollar decline.

Short selling requires the use of margin, so traders must apply before being able to sell short.

Speak Stocks: How to short a stock.
The Wild Investor: Shorting 101.

Strike Price

ashivapu — Sat, 03 Oct 2009 19:49:48 +0000

The price at which a contract can be exercised. Stick prices are generally used with options, to designate when the current holder of the contracts can execute their options. Also referred to as exercise price. Related posts:Options Put Option Quote Related posts:

Stakeholder

ashivapu — Sat, 03 Oct 2009 19:47:22 +0000

An individual, group, or party that can affect or be affected by the action of the organization. In most cases, the stakeholder benefits by receiving any profit or losses experienced by the company. A share holder is a type of stakeholder. Related posts:Security Stock Split Earnings Per Share (EPS) Related posts:

Stock Split

ashivapu — Sat, 03 Oct 2009 03:29:17 +0000

An action in which the company’s existing shares are divided into multiple shares. While outstanding shares increase, the full dollar value of those shares remain the same.

Example: In a 2-for-1 split, each stockholder receives an additional share for each share he or she holds, but that actual price of those shares are higher.

Also referred to as a scrip issue, bonus issue, capitalization issue or free issue.

Security

ashivapu — Fri, 02 Oct 2009 21:41:55 +0000

Any note, stock, treasury stock, bond, debenture, certificate of interest or participation in any profit-sharing agreement.

Any oil, gas, or other mineral royalty or lease, any collateral trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit, for a security, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities.

An investment instrument, other than an insurance policy or fixed annuity, issued by a corporation, government, or other organization which offers evidence of debt or equity.

Stop Limit

ashivapu — Fri, 02 Oct 2009 04:38:21 +0000

A stop limit order is a combination of stop market and limit orders. Once the activation price is set, then your limit order goes into effect.

Speak Stocks: Types Of Stock Market Orders.

Stop Market

ashivapu — Fri, 02 Oct 2009 04:37:22 +0000

A stop market order indicates you want your stop order to become a market order once a specific price has been reached.

Example: If stock X sits at $20 and you want to buy it once it passes $22, then your stock market order would be set at $22.

Speak Stocks: Types Of Stock Market Orders