Money Market Definitions - Starting with S

Here is the list of terms associated with the money market, starting with alphabet S

 

SAPs

Special Purpose Vehicles approved by the appropriate authority or the Government of India.

 

SALE PRICE

The price at which a fund offers to sell one unit of its scheme to investors. This NAV is grossed up with the entry load applicable, if any.

 

SALES CHARGE

Fee on the purchase of new shares of a mutual fund. A sales charge is similar to paying a premium for a security in that the customer must pay a higher offering price. Sometimes called a load.

 

SCHEME

A mutual fund can launch more than one scheme. With different schemes, in spite of there being a common trust, the assets contributed by the unit holders of a particular scheme are maintained and managed separately from other schemes and any profit/loss from the assets accrue only to the unit holders of that scheme

 

SEBI

The Securities and Exchange Board of India.

  

SECONDARY MARKET

The market where the securities are traded i.e purchased or sold after they have been initially offered to the public through a public offer in the primary market.

 

SECTOR ALLOCATION

That portion of a fund which invests in narrowly defined segments of the economy, i.e. utilities, healthcare services, telecommunications, etc.

 

SECTOR FUNDS

Sector funds invest in the stocks of one specific sector of the economy, such as health care, chemicals, or information technology.

 

SECURITY

Generally, an instrument evidencing debt of or equity in a common enterprise in which a person invests on the expectation of financial gain. The term includes notes, stocks, bonds, debentures or other forms of negotiable and non-negotiable evidences of indebtedness or ownership.

 

SHARE PRICE

The value of one share in a listed company fund. With most funds, the NAV is calculated every day, because the value of a fund's securities changes every day in response to the movements of the stock, bond and money markets. For some funds, share price is calculated on an hourly basis.

 

SHARE HOLDER

The owner of one or more shares of stock in a corporation. Shareholder rights can vary according to the articles of incorporation of the by-laws of a particular company.

 

SHARPE RATIO

The Sharpe ratio measures the risk-adjusted return of a fund. Simply put, the ratio measures the variability of ' excess returns' (defined by returns of the fund over the 'risk less' 91 day T-bill). Mathematically, the formula takes a fund's return in excess of a risk-free investment and divides this by the standard deviation of the returns. The higher the Sharpe ratio, the better the fund

 

SPREAD

The difference between the rates at which money is deposited in a financial institution and the higher rates at which the money is lent out. Also, the difference between the bid and ask price for a security.

 

SUBSIDY

A financial contribution by government (including any form of income or price support) that also confers a benefit to the recipient (i.e., producers of goods or services or buyers of goods). Many types of government practices constitute a financial contribution, including traditional forms of subsidies such as grants and loans, as well as foregone revenues such as tax credits.

 

SYSTEMATIC INVESTMENT PLAN

Many mutual funds offer investment programs whereby unitholders can invest. The Unitholders of the scheme can benefit by investing specific Rupee amounts periodically, for a continuous period. The SIP allows the investors to invest a fixed amount of Rupees every month or quarter for purchasing additional units of the scheme at NAV based prices.

 

SYSTEMATIC WITHDRAWAL PLANS

Many mutual funds offer withdrawal programs whereby unitholders receive payments from their investments. These payments are usually drawn from the fund's dividend income and capital gain distributions, if any, and from principal only when necessary.

 

SYSTEMATIC TRANSFER PROGRAM (STP)

A plan that allows the investor to give a mandate to the fund to periodically and systematically transfer a certain amount from one scheme to another.

 

STANDARD DEVIATION

A statistical measurement of the dispersion of a fund's return over a specified time period. Investors may examine historical standard deviation in conjunction with historical returns to decide whether a fund's volatility would have been acceptable given the returns it would have produced. A higher standard deviation indicates a wider dispersion of past returns and thus greater historical volatility. Standard deviation does not indicate the absolute performance, but merely indicates the volatility of its returns over time.

 

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