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.Short-term investment services Services that assist firms in making short-term investments.Short-term solvency ratios Ratios used to judge the adequacy of liquid assets for meeting short-termobligations as they come due, including (1) the current ratio, (2) the acid-test ratio, (3) the inventory turnoverratio, and (4) the accounts receivable turnover ratio.Short-term tax exempts Short-term securities issued by states, municipalities, local housing agencies, andurban renewal agencies.SIC Abbreviation for Standard Industrial Classification.Each 4-digit code represents a unique businessactivity.Side effects Effects of a proposed project on other parts of the firm.Sight draft Demand for immediate payment.SIMEX (Singapore International Monetary Exchange) A leading futures and options exchange inSingapore.Simple prospect An investment opportunity where a certain initial wealth is placed at risk and only twooutcomes are possible.Single country fund A mutual fund that invests in individual countries outside the United States.Single factor model A model of security returns that acknowledges only one common factor.See: factormodel.Single index model A model of stock returns that decomposes influences on returns into a systematic factor,as measured by the return on the broad market index, and firm specific factors.Signal The process of conveying information through a firm's actions. 131Dictionary of Finantial and Business TermsLico Reis Consultoria & Línguaslicoreis@terra.com.brSignaling approach Approach to the determination of the optimal capital structure asserting that insiders in afirm have information that the market does not have; therefore, the choice of capital structure by insiders cansignal information to outsiders and change the value of the firm.This theory is also called the asymmetricinformation approach.Signaling view (on dividend policy) The argument that dividend changes are important signals to investorsabout changes in management's expectation about future earnings.Simple compound growth method A method of calculating the growth rate by relating the terminal value tothe initial value and assuming a constant percentage annual rate of growth between these two values.Simple interest Interest calculated only on the initial investment.Related:compound interest.Simple linear regression A regression analysis between only two variables, one dependent and the otherexplanatory.Simple linear trend model An extrapolative statistical model that asserts that earnings have a base level andgrow at a constant amount each period.Simple moving average The mean, calculated at any time over a past period of fixed length.Simulation The use of a mathematical model to imitate a situation many times in order to estimate thelikelihood of various possible outcomes.See: Monte Carlo simulation.Single-index model Related: market modelSingle-payment bond A bond that will make only one payment of principal and interest.Single-premium deferred annuity An insurance policy bought by the sponsor of a pension plan for a singlepremium.In return, the insurance company agrees to make lifelong payments to the employee (thepolicyholder) when that employee retires.Sinker Sinking fund.Sinking fund requirement A condition included in some corporate bond indentures that requires the issuer toretire a specified portion of debt each year.Any principal due at maturity is called the balloon maturity.Size Large in size, as in the size of an offering, the size of an order, or the size of a trade.Size is relative frommarket to market and security to security.Context: "I can buy size at 102-22," means that a trader can buy asignificant amount at 102-22.Skewed distribution Probability distribution in which an unequal number of observations lie below andabove the mean.Skip-day settlement The trade is settled one business day beyond what is normal.Slippage The difference between estimated transaction costs and actual transaction costs.The difference isusually composed of revisions to price difference or spread and commission costs.Small-firm effect The tendency of small firms (in terms of total market capitalization) to outperform thestock market (consisting of both large and small firms).Small issues exemption Securities issues that involve less than $1.5 million are not required to file aregistration statement with the SEC.Instead, they are governed by Regulation A, for which only a briefoffering statement is needed. 132Dictionary of Finantial and Business TermsLico Reis Consultoria & Línguaslicoreis@terra.com.brSmithsonian agreement A revision to the Bretton Woods international monetary system which was signed atthe Smithsonian Institution in Washington, D.C., U.S.A., in December 1971.Included were a new set of parvalues, widened bands to +/- 2.25% of par, and an increase in the official value of gold to US$38.00 perounce.Society for Worldwide Interbank Financial Telecommunications (SWIFT) A dedicated computernetwork to support funds transfer messages internationally between over 900 member banks worldwide."Soft" Capital Rationing Capital rationing that under certain circumstances can be violated or even viewedas made up of targets rather than absolute constraints.Soft currency A currency that is expected to drop in value relative to other currencies.Soft dollars The value of research services that brokerage houses supply to investment managers "free ofcharge" in exchange for the investment manager's business/commissions.Sole proprietorship A business owned by a single individual.The sole proprietorship pays no corporateincome tax but has unlimited liability for business debts and obligations.Sovereign risk The risk that a central bank will impose foreign exchange regulations that will reduce ornegate the value of FX contracts.Also refers to the risk of government default on a loan made to it orguaranteed by it.Span To cover all contingencies within a specified range.Special dividend Also referred to as an extra dividend.Dividend that is unlikely to be repeated.Special drawing rights (SDR) A form of international reserve assets, created by the IMF in 1967, whosevalue is based on a portfolio of widely used currencies.Specialist On an exchange, the member firm that is designated as the market maker (or dealer for a listedcommon stock).Only one specialist can be designated for a given stock, but dealers may be specialists forseveral stocks.In contrast, there can be multiple market makers in the OTC market.Specific issues market The market in which dealers reverse in securities they wish to short.Specific risk See:unique risk
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