Introduction to Finance

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Supplemental Liquidity Providers (SLPs)
Help add liquidity to the NYSE trading fl oor, 
meaning they supplement the work of DMMs 
by buying and selling shares throughout the 
day
Surplus economic unit
Generates more 
money than it spends, and thus, it has excess 
money to save or invest
Sustainable growth rate
The estimate of 
how quickly a fi rm can grow when it uses inter-
nal equity and debt fi nancing to keep its capital 
structure constant over time
Syndicate
Group of several investment bank-
ing fi rms that participate in the underwriting and 
distributing a security issue
Systematic risk (market risk)
Risk that is 
inherent in the macro economy and cannot be 
eliminated through diversifi cation
Target dividend payout policy
A policy of 
adjusting the dividend payout dollar amount 
toward the target dividend payout ratio 
Tax motives
The motive to hold cash outside 
of the United States due to high U.S. corporate 
tax rates for bringing cash from overseas profi ts 
back into the United States
Tax policy
Sets the level and structure of 
taxes to aff ect the economy
Tax risk
Variations in a fi rm’s tax rate and 
tax-related charges over time due to changing 
tax laws and regulations 
Term structure
Indicates the relationship 
between interest rates or yields and the matu-
rity of comparable quality debt instruments 
Third market
Market for large blocks of 
listed stocks that operates outside the confi nes 
of the organized exchanges
Thrift institutions
Noncommercial bank 
depository institutions referred to as savings 
and loan associations, savings banks, and credit 
unions that accumulate individual savings and 
lend primarily to other individuals