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.Speculative demand (for money) The need for cash to take advantage of investment opportunities that mayarise.Speculative grade bond Bond rated Ba or lower by Moody's, or BB or lower by S&P, or an unrated bond.Speculative motive A desire to hold cash for the purpose of being in a position to exploit any attractiveinvestment opportunity requiring a cash expenditure that might arise.Speculator One, who attempts to anticipate price changes and, through buying and selling contracts, aims tomake profits.A speculator does not use the market in connection with the production, processing, marketingor handling of a product.See: trader.Speed Related:prepayment speed 133Dictionary of Finantial and Business TermsLico Reis Consultoria & Línguaslicoreis@terra.com.brSpin-off A company can create an independent company from an existing part of the company by selling ordistributing new shares in the so-called spinoff.Split Sometimes, companies split their outstanding shares into a larger number of shares.If a company with 1million shares did a two-for-one split, the company would have 2 million shares.An investor with 100 sharesbefore the split would hold 200 shares after the split.The investor's percentage of equity in the companyremains the same, and the price of the stock he owns is one-half the price of the stock on the day prior to thesplit.Split-fee option An option on an option.The buyer generally executes the split fee with first an initial fee,with a window period at the end of which upon payment of a second fee the original terms of the option maybe extended to a later predetermined final notification date.Split-rate tax system A tax system that taxes retained earnings at a higher rate than earnings that aredistributed as dividends.Spot exchange rates Exchange rate on currency for immediate delivery.Related: forward exchange rate.Spot futures parity theorem Describes the theoretically correct relationship between spot and futures prices.Violation of the parity relationship gives rise to arbitrage opportunities.Spot interest rate Interest rate fixed today on a loan that is made today.Related: forward interest rates.Spot lending The origination of mortgages by processing applications taken directly from prospectiveborrowers.Spot markets Related: cash marketsSpot month The nearest delivery month on a futures contract.Spot price The current marketprice of the actual physical commodity.Also called cash price.Spot rate The theoretical yield on a zero-coupon Treasury security.Spot rate curve The graphical depiction of the relationship between the spot rates and maturity.Spot trade The purchase and sale of a foreign currency, commodity, or other item for immediate delivery.Spread (1) The gap between bid and ask prices of a stock or other security.(2) The simultaneous purchaseand sale of separate futures or options contracts for the same commodity for delivery in different months.Also known as a straddle.(3) Difference between the price at which an underwriter buys an issue from a firmand the price at which the underwriter sells it to the public.(4) The price an issuer pays above a benchmarkfixed-income yield to borrow money.Spread income Also called margin income, the difference between income and cost.For a depositoryinstitution, the difference between the assets it invests in (loans and securities) and the cost of its funds(deposits and other sources).Spread strategy A strategy that involves a position in one or more options so that the cost of buying anoption is funded entirely or in part by selling another option in the same underlying.Also called spreading.Spreadsheet A computer program that organizes numerical data into rows and columns on a terminal screen,for calculating and making adjustments based on new data.Stakeholders All parties that have an interest, financial or otherwise, in a firm - stockholders, creditors,bondholders, employees, customers, management, the community, and the government. 134Dictionary of Finantial and Business TermsLico Reis Consultoria & Línguaslicoreis@terra.com.brStand-alone principle Investment principle that states a firm should accept or reject a project by comparing itwith securities in the same risk class.Standard deviation The square root of the variance.A measure of dispersion of a set of data from theirmean.Standard error In statistics, a measure of the possible error in an estimate.Standardized normal distribution A normal distribution with a mean of 0 and a standard deviation of 1.Standardized value Also called the normal deviate, the distance of one data point from the mean, divided bythe standard deviation of the distribution.Standby agreement In a rights issue, agreement that the underwriter will purchase any stock not purchasedby investors.Standby fee Amount paid to an underwriter who agrees to purchase any stock that is not subscribed to thepublic investor in a rights offering.Standstill agreements Contracts where the bidding firm in a takeover attempt agrees to limit its holdingsanother firm.Stated annual interest rate The interest rate expressed as a per annum percentage, by which interestpayment is determined.Stated conversion price At the time of issuance of a convertible security, the price the issuer effectivelygrants the security holder to purchase the common stock, equal to the par value of the convertible securitydivided by the conversion ratio.Stated maturity For the CMO tranche, the date the last payment would occur at zero CPR.Statement billing Billing method in which the sales for a period such as a month (for which a customer alsoreceives invoices) are collected into a single statement and the customer must pay all of the invoicesrepresented on the statement.Statement of cash flows A financial statement showing a firm's cash receipts and cash payments during aspecified period.Statement-of-cash-flows method A method of cash budgeting that is organized along the lines of thestatement of cash flows.Statement of Financial Accounting Standards No.8 This is a currency translation standard previously inuse by U.S.accounting firms.See: Statement of Accounting Standards No.52.Statement of Financial Accounting Standards No.52 This is the currency translation standard currentlyused by U.S.firms.It mandates the use of the current rate method.See: Statement of Financial AccountingStandards No.8.Static theory of capital structure Theory that the firm's capital structure is determined by a trade-off of thevalue of tax shields against the costs of bankruptcy.Statutory surplus The surplus of an insurance company determined by the accounting treatment of bothassets and liabilities as established by state statutes
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