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Glossary of Terms

seasonally adjusted

figures or statistics, such as employment statistics, which are modified to take account of seasonal factors like the large number of graduating students entering the workforce at the end of each school year.

secondary market

a market available to trade securities after their initial public offering, such as the philippine stock exchange. the opposite of primary market.

sector

a group of securities that share similar characteristics, such as building materials, transport and engineering companies.

short

a trader who is short the market is of the opinion that the price of a security or securities will go down, and has more sold than bought positions. see also short selling.

short interest

shares that have been sold short and not yet repurchased.

short interest ratio

a ratio which tells how many days it would take to buy back all the shares which have been sold short. a short interest ratio of 2 would indicate that it would take 2 trading days to buy back all the shares which have been sold short. this is based on the current volume.

short selling

the strategy of selling a security you do not already own in the belief that the price will fall and the security can be bought back at a lower price.

slippage

the difference between estimated and actual transaction costs. the difference is usually comprised of commissions and price differences.

split

an increase in the number of outstanding shares in a company, with the market price dropping proportionately. an example would be a four for one split of a php40 share into four times as many shares each valued at php10. the usual purpose of a split is to make a stock with a high per-share price more accessible to smaller investors.

spread

the difference between the current bid price and the current ask (offering) price. also, the purchase of one option and the sale of a related option.

stop order

an order placed with a broker which is not at the current market price. it becomes a market order once the security touches the specified price. buy stop orders are placed above the present market price. sell stop orders are placed below the present market price.

supply-side economics

an economic theory, which holds that reducing tax rates to businesses and wealthy individuals will stimulate savings and investment for the benefit of everyone. the good effects from the tax reductions will trickle-down through the economy.

support

a price level at which declining prices stop falling and move sideways or upward. it is a price level where there is sufficient demand to stop the price from falling.

surplus

the extent to which revenue or income exceeds expenditure. the opposite of deficit.

swap

an exchange of streams of payments in an interest rate, currency or equity exchange transaction. the most common swap is an interest rate swap, where one party is obliged to pay a fixed interest rate to the other party in return for a floating interest rate.

swaption

an option on a swap, such as the option to enter into an interest rate swap transaction at a future date.

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