S corporations are small corporations that are taxed under Subchapter S of the Internal Revenue Code. This essentially allows corporations with a small number of shareholders to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes. Shareholders report the flow-through of income and are taxed at their personal income tax rates.

The IRS defines eligible corporations as those that:

• Are domestic corporations
• Have only eligible shareholders
• Have fewer than 100 shareholders
• Have only one class of stock

When investors buy and sell securities through a brokerage account, the transactions occur on what's known as the secondary market.

While the secondary market isn't a place, it includes all of the exchanges, trading rooms, and electronic networks where these transactions occur. The issuer -- company or government -- that sold the security initially receives no proceeds from these trades, as it does when the securities are sold for the first time.

A strategy that uses elements of market timing to identify business sectors of the economy that are in a position to either under or outperform.

For example, if an investor owned shares in a utilities index, but felt this index was ready to underperform versus other sectors, one might consider selling this holding in favor of another one with a better outlook. In short, this particular investor would be exiting or rotating out of one sector for another.

All securities and commodities exchanges in the United States are self-regulatory organizations (SROs), as is NASD.

These bodies establish the standards under which their members conduct business, monitor the way that business is conducted, and enforce their own rules.

For example, the New York Stock Exchange (NYSE) requires that client orders delivered to the floor of the exchange be filled before orders that originate with traders on the floor, who buy and sell for their own accounts.

Sell short orders are transactions in which an investor sells borrowed securities in anticipation of a price decline. The primary use of short selling is to allow investors to yield financial gain if a particular stock price should fall.

Selling short carries with it an obligation to buy the shares back in the future. Selling short may be done only in margin accounts and must meet specific equity requirements. Finally, short sell proceeds cannot be used to buy additional stock.

Some mutual funds use multiple share classes for the same underlying portfolio.

For example, Class A shares would allow an investor to pay an upfront sales charge to enter a fund, whereas a Class B share would defer the sales charge based on how long the investor stays in the fund.

Some mutual fund families only offer conventional share classes. Others, like Vanguard's VIPERs are offering ETF versions of their funds.

The U.S. Securities and Exchange Commission allows companies and government agencies to file a single registration document that permits the issuance of multiple securities that the issuing organization can "sit on" for a two-year time period before releasing them into the market. New issues that are registered through this process are prepared in advance and kept in waiting until funds are needed or market conditions become favorable. They are said to be "on the shelf", hence the term shelf registration.

A put option grants the right to sell at a specified price a specific number of shares by a certain date. A short put is someone who has sold this right in exchange for a premium.

The put option seller (called a writer) hopes the stock will remain stable, rise or drop by an amount less than his or her profit on the premium.

A Simple Moving Average (SMA), the most basic type of moving average, tracks the average of a set of a security's closing prices over a certain period of time, which is typically a year.

Like all moving averages, SMAs make it easier to spot trends by smoothing out price fluctuations that can occur especially in volatile markets.

The SMA gives equal weight to all prices in the data set. For example, a 5-day moving average would take the average of five days' closing prices to make the first data point. On the sixth day, the first day's value would be dropped off and a second data point would be created.

All moving averages are lagging indicators, which means they follow price movements, but SMAs lag the most.

A specialist or specialist unit is a member of a securities exchange responsible for maintaining a fair and orderly market in a specific security or securities on the exchange floor.

Specialists execute market orders given to them by other members of the exchange known as floor brokers or sent to their post through an electronic routing system.

Typically, a specialist acts both as agent and principal. As agent, the specialist handles limit orders for floor brokers in exchange for a portion of their commission. Those orders are maintained in an electronic record known as the limit order book, or specialist's book, until the stock is trading at the acceptable price. As principal, the specialist buys for his or her own account to help maintain a stable market in a security.

For example, if the spread, or difference, between the bid and ask, or the highest price offered by a buyer and the lowest price asked by a seller, gets too wide, and trading in the security hits a lull, the specialist might buy, sell, or sell short shares to narrow the spread and stimulate trading. Because of restrictions the exchange puts on trading, a specialist is not permitted to buy a security when there is an unexecuted order for the same security at the same price in the limit order book.

In a spin-off, a company sets up one of its existing subsidiaries or divisions as a separate company. Shareholders of the parent company receive stock in the new company based on an evaluation established for the new entity. In addition, they continue to hold stock in the parent company.

The motives for spin-offs vary. A company may want to refocus its core businesses, shedding those that it sees as unrelated. Or it may want to set up a company to capitalize on investor interest. In other cases, a corporation may face regulatory hurdles in expanding its business and spin off a unit to be in compliance. Sometimes, a group of employees will assume control of the new entity through a buyout, an employee stock ownership plan (ESOP), or as the result of negotiation.

Standard deviation is a statistical measurement of how far a variable quantity, such as the price of a stock, moves above or below its average value. The wider the range, which means the greater the standard deviation, the riskier an investment is considered to be.

Some analysts use standard deviation to predict how a particular investment or portfolio will perform. They calculate the range of the investment's possible future performances based on a history of past performance, and then estimate the probability of meeting each performance level within that range.

For this statistic, total returns are adjusted downward to account for sales charges and are listed for the trailing one-, three-, five-, and 10-year periods.

For funds with front-end loads, the full amount of the load is deducted. For deferred, or back-end loads, the percentage charged often declines the longer shares are held. This charge, often coupled with a 12b-1 fee, usually disappears entirely after several years.

Morningstar adjusts the deferred load accordingly when making this calculation. For funds that lack a 10-year history, we provide an annualized load-adjusted return figure for the period since the fund's inception.

In technical analysis, the Stochastic Oscillator is a banded oscillator, which means its values fluctuate between 0 and 100. It's typically used to show how a security's current closing price compares with its range of high and low prices over a set period of time, usually 14 days.

Some technical analysts also use the Stochastic Oscillator to show accumulation, or buying pressure, and distribution, or selling pressure. Accumulation may occur when closing levels are consistently in the high end of the range, while distribution may happen when closing levels are regularly in the low end of the range.

Some analysts argue that readings above 80 indicate a security is overbought, and that prices may begin to decline, and readings below 20 mean a security is oversold, and that prices may begin to rise.

In technical analysis, the Stochastic RSI applies the Stochastic Oscillator to the Relative Strength Index (RSI) to measure changes in RSI. RSI compares a security's average gains to its average losses over a given period of time.

Stochastic RSI is an oscillator whose value fluctuates between 0 and 1. When RSI reaches a record high, Stochastic RSI is 1, and when RSI experiences a record low, Stochastic RSI is 0. When Stochastic RSI is 0.30, for example, it means that RSI is 30% higher than its lowest low and 70% lower than its highest high.

Stochastic RSI may also be used to indicate future price movements by revealing when a security may be overbought or oversold. In general, readings above 0.8 may indicate a security is overbought and readings below 0.20 could imply a security is oversold.

Positive and negative divergences may be used as well. For instance, a positive divergence--which means the indicator is rising as prices are falling--followed by a move above 0.2 could signal an approaching uptrend. A negative divergence--which means the indicator is falling as prices are rising--followed by a move below 0.8 could indicate a future downtrend.

This is a type of order that combines the features of stop order with those of a limit order.

A stop-limit order will be executed at a specified price (or better) after a given stop price has been reached. Once the stop price is reached by the market, the stop-limit order becomes a limit order to buy (or sell) at the limit price or better. This order is then handled as defined by a limit order.

The primary purpose of a stop-limit order is to give the trader more control over where the order should be filled. The downside, as with all limit orders, is that the trade will not be executed if the stock does not reach the limit price.

These types of orders also may be placed GTC (good til cancelled); they can not be placed AON (all or none). Stop limit orders are used by some investors to buy a stock when it reaches a certain price, allowing the investor to buy when the stock has upward momentum behind it.

A stop order is an order to buy or sell a security when the NBBO (National Best Bid-Offer) reaches or surpasses a specified level, or trigger, called a stop price, attempting to limit your loss or locking in your profit.

Whenever the bid price (sell orders) or ask price (buy orders) reaches or surpasses the stop price, the stop order becomes a market order and is then handled as defined under the definition or a market order.

This type of order is also referred to as a "stop-loss order". Stops are not a definite guarantee of getting the desired entry/exit points. For instance, if a stock gaps down, then the trader's stop order will be triggered (or filled) at a price significantly lower than expected.

• Buy Stop Orders - The stop price is set above the current ASK price
• Sell Stop Orders - The stop price is set below the current BID price

Depending on market conditions, once the order is triggered, there is no guarantee of the execution price and the price received may be several points away from the stop price. AON (all or none) qualifier is not permitted on stop orders.

Risk that is inherent to the market or a particular market segment. Examples of systematic risk are wars, recession and interest rates because they have a widespread effect and cannot be avoided by diversifying an individual's investments.