Introduction to Finance

Standard of value
Prices and contracts for 
deferred payments are expressed in terms of 
the monetary unit
Statement of cash fl ows
Provides a sum-
mary of the cash infl ows (sources) and cash 
outfl ows (uses) during a specifi ed accounting 
period
Statewide branch banking
Allows banks to 
operate offi
ces throughout a state
Static trade-off hypothesis
A theory that 
states fi rms will balance the advantages of debt 
with its disadvantages
Stock certifi cate
Certifi 
cate showing an 
ownership claim of a specifi c company
Stock dividend
A dividend in which investors 
receive shares of stock rather than cash
Stock options
Allow managers to purchase, 
at a future time, a stated number of the fi rm’s 
shares at a specifi c price
Stock split
A process in which the fi rms 
distributes additional shares for every share 
owned
Stop-loss order
Order to sell stock at the mar-
ket price when the price of the stock falls to a 
specifi ed level
Store of value
Money held for some period 
of time before it is spent
Street name
An investor’s stock certifi cates 
are kept electronically at the brokerage fi rm 
rather than investor taking personal possession 
of them
Strike price (exercise price)
Price at which 
the asset can be traded under an option contract
SWOT analysis
A review of a fi rm’s inter-
nal strengths and weaknesses and its external 
opportunities and threats
Strong-form effi
cient market
A market in 
which prices refl ect all knowledge, including 
past and current publicly known and private 
information 
Subchapter S corporation
Has fewer than 
35 shareholders, none of which is another 
corporation; its income fl ows untaxed to the 
shareholders and is taxed only once, as per-
sonal income of the shareholders