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Step-Up in Basis A step-up in basis is a tax provision that adjusts the cost basis of an inherited asset to its fair market value (FMV) on the decedent’s date of death. This reset can substantially reduce or eliminate capital gains taxes that heirs would otherwise owe when they sell the asset. How it works…

Statutory Reserves Statutory reserves are the minimum amounts of cash and readily marketable securities that insurance companies are required to hold by state insurance regulators. Their purpose is to ensure insurers have sufficient liquidity to pay legitimate policyholder claims when they arise. Why they exist U.S. states regulate insurance (authority affirmed by the McCarran–Ferguson Act…

Statute of Limitations: Types, How They Work, and Key Considerations What is a statute of limitations? A statute of limitations sets a legal deadline for starting a lawsuit or criminal prosecution. Its purpose is to promote fairness and reliability by requiring timely claims while evidence and witness memories are still available. Time limits vary by…

Statute of Frauds Definition The statute of frauds is a legal doctrine that requires certain types of contracts to be in writing and signed to be enforceable. Its purpose is to reduce misunderstandings and prevent fraudulent claims about the existence or terms of important agreements. Purpose Evidentiary: Provides written proof of the parties’ agreement and…

Statistics: Definition, Types, and Importance Key takeaways Statistics studies how to collect, summarize, analyze, and draw conclusions from data. Two main branches: descriptive statistics (summarize data) and inferential statistics (make generalizations from samples to populations). Concepts include measures of central tendency, variability, levels of measurement, and sampling methods. Statistics underpins decision-making across science, government, business,…

Statistical Significance: What It Is, How It Works, and Examples Statistical significance is a conclusion from hypothesis testing that an observed relationship or difference in data is unlikely to have occurred by random chance alone. Analysts use it to decide whether data support a systematic effect (e.g., a drug reduces symptoms, market returns changed after…

Statement of Retained Earnings — Overview A statement of retained earnings (also called a retained earnings statement, statement of owner’s/shareholders’ equity, or equity statement) shows how a company’s retained earnings changed over a specified period. It reconciles beginning and ending retained earnings using information such as net income and dividends. The statement may appear separately…

Understanding State-Owned Enterprises (SOEs) Key takeaways State-owned enterprises (SOEs) are legal entities created by governments to carry out commercial activities, with full or partial government ownership. SOEs operate across sectors such as finance, utilities, transportation, postal services, hospitality, and extractive industries. Some SOEs are run for profit; others provide public services and may operate at…

Understanding startups A startup is an early-stage company founded to bring a new product or service to market. Startups focus on rapid learning and growth but typically lack a proven business model and sufficient revenue, so they rely on external capital and carry high risk. Key takeaways Startups center on innovation and solving a clearly…

Stare Decisis Stare decisis is a legal doctrine that directs courts to follow established precedents when deciding cases with similar facts or issues. The term is Latin for “to stand by things decided.” By promoting consistency and predictability, stare decisis helps ensure that like cases are treated alike across time. How it works Precedent: A…

Standby Letter of Credit (SLOC) A standby letter of credit (SLOC), also called a standby bank letter of credit (SBLC), is a bank-issued guarantee that a beneficiary will be paid if the applicant (the bank’s client) fails to meet a contractual obligation. The bank pays only when the applicant defaults or cannot perform, making the…

Standardization What is standardization? Standardization is a system of agreed guidelines and specifications that organizations, industries, or markets adopt to ensure consistency, compatibility, and quality across products, services, and processes. By applying uniform rules, standardization makes outcomes comparable, reduces variability, and helps stakeholders operate efficiently together. How it works Standardization establishes commonly accepted procedures and…

Standard of Living What it means Standard of living describes the material well‑being of individuals or populations, focusing on access to necessities such as income, housing, food, healthcare and education. It’s a measure of wealth, consumption and comfort — essentially how much a population can afford and the goods and services available to it. How…

Standard Industrial Classification (SIC) Code What is a SIC code? A Standard Industrial Classification (SIC) code is a four-digit numerical code used to categorize U.S. companies by their primary business activity. Introduced in 1937, SIC codes were developed to classify and analyze economic activity across industries and government agencies. Although the North American Industry Classification…

Standard Error What is standard error? Standard error (SE) quantifies how much a sample statistic (commonly the sample mean) is expected to vary from the true population parameter. It is the standard deviation of the sampling distribution of a statistic and indicates how accurately a sample represents the population. Larger samples generally produce smaller SEs….

Standard Deviation What it is Standard deviation (SD) is a measure of how spread out the values in a dataset are around the mean. It quantifies the typical distance of data points from the average and is widely used to describe variability and risk. Key idea A small SD: data are clustered near the mean….

Standard Deduction The standard deduction is a fixed dollar amount that reduces the income on which you’re taxed. It’s an alternative to itemizing deductions and is adjusted annually for inflation. Using the standard deduction simplifies filing for many taxpayers and often results in a lower taxable income than adding up itemized expenses. Key takeaways The…

Standard & Poor’s (S&P) — Overview Standard & Poor’s, now operating as S&P Global, is a major provider of financial market intelligence: indexes, credit ratings, research, and data used widely by investors, issuers, and regulators. What S&P Global does Maintains widely followed market indexes (most notably the S&P 500) used as benchmarks for funds and…

Stalking-Horse Bid A stalking-horse bid is an initial offer on the assets of a bankrupt or distressed company that sets the minimum price for subsequent bids. The bankrupt company selects a bidder to make the opening offer; that bid becomes the floor at which an auction for the assets begins. The process is typically overseen…

Key Takeaways * A stakeholder is any individual or group with a vested interest in the success or actions of an organization. * Stakeholders can be internal (owners, employees, investors) or external (customers, suppliers, communities, governments). * Stakeholder interests often conflict (for example, cost-cutting vs. employee well‑being); effective organizations manage and balance these interests. *…

Economic Stagnation: Definition, Causes, Effects, and Policy Responses Key takeaways Stagnation is a prolonged period of little or no economic growth, commonly defined as annual GDP growth under about 2–3%. It can arise from cyclical conditions, one-off shocks, or deeper structural problems. Policy responses include fiscal stimulus, tax and regulatory changes, monetary easing, and structural…

Stagflation: Definition, History, Causes, and Warning Signs Key takeaways * Stagflation is the simultaneous occurrence of slow economic growth, high unemployment, and rising prices. * It is hard to address because policies that combat inflation tend to slow growth, and policies that stimulate growth tend to raise inflation. * Major supply shocks (like oil crises…

Stable Value Fund What is a stable value fund? A stable value fund is an insured bond portfolio designed to preserve capital and deliver steady interest payments. Commonly offered in employer-sponsored retirement plans (such as 401(k)s), these funds appeal to investors with low risk tolerance and savers approaching retirement because they prioritize stability over growth….

Spreads in Finance: What They Are and Why They Matter Definition A spread is the difference between two related financial values — prices, yields, or rates. Common examples include the bid‑ask spread in stocks, yield differences between bonds, lending margins for banks, and multi‑leg option strategies. Spreads reveal liquidity, transaction costs, relative risk, and trading…

Spread Betting Spread betting is a way to speculate on the price movement of a financial market without owning the underlying asset. A provider quotes two prices (the bid and the ask, or the spread), and you bet whether the market will move below the bid or above the ask. Positions are typically leveraged, so…

Spot Trade A spot trade is a transaction in which a financial instrument—such as a currency, commodity, or security—is exchanged for immediate (or near‑term) delivery at the current market price, called the spot price. Settlement typically occurs within one or two business days. Spot trades involve direct ownership or physical delivery of the asset, unlike…

Understanding Spot Rates The spot rate (or spot price) is the current market price for immediate settlement of an asset—such as a currency, commodity, security, or bond. It reflects the real-time balance of supply and demand and serves as the benchmark for many trading and hedging decisions. Key points Spot rate = price for immediate…

Spot Price Key takeaways The spot price is the market price at which an asset—such as a security, commodity, or currency—can be bought or sold for immediate delivery. Spot prices change constantly as buyers and sellers transact. Futures contract prices reference spot prices but reflect expectations about future supply, demand, carrying costs, and interest rates….

Spot Market What is the spot market? The spot market (also called the cash or physical market) is where financial instruments and commodities are bought and sold for immediate payment and near-term delivery. Commonly traded assets include equities, currencies, commodities, and some fixed-income instruments. The price at which an asset can be bought or sold…

Spot Exchange Rate: Definition, How It Works, and How to Trade Key takeaways * The spot exchange rate is the current market price to exchange one currency for another for immediate settlement. * Most spot transactions settle two business days after the trade date (T+2); USD/CAD typically settles next business day (T+1). * Short-term spot…

Spoofing Spoofing is the practice of disguising a communication or identity to make it appear to come from a trusted source. Attackers change email addresses, display names, phone numbers, text messages, website URLs, GPS signals, or other identifiers to trick victims into revealing information, downloading malware, or sending money. Key takeaways Spoofing can occur via…

Spin-Off Key takeaways A spin-off (also called a spinout or starburst) creates a new, independent company by distributing shares of a business unit to the parent company’s shareholders. Companies pursue spin-offs when a division is expected to generate greater value independently than as part of the parent. Spin-offs establish separate management and branding but may…

Spinning Top Candlestick A spinning top is a candlestick pattern with a small real body positioned roughly mid‑way between long upper and lower shadows. The small body shows little difference between open and close, while the long wicks indicate significant price movement in both directions during the period. Together these features signal market indecision. Key…

Spillover Effect What it is A spillover effect occurs when an economic event in one country produces indirect impacts on other countries or regions. While spillovers can be positive or negative, the term often refers to adverse ripple effects—such as reduced demand, falling investment, or disrupted trade—transmitted across borders through financial, trade, or commodity links….

SPDR ETFs (Spiders): A concise guide SPDRs — commonly called “Spiders” — are exchange-traded funds (ETFs) originally created to provide an efficient way to invest in broad market indexes. The most famous SPDR is SPY, which tracks the S&P 500, but the SPDR family includes many ETFs that track sector, dividend, and specialty indices. Key…