What Is Suitable (Suitability)? Suitability refers to an ethical, enforceable standard regarding investments that financial professionals are held to when dealing with clients. Before making a recommendation, brokers, money managers, and other financial advisors have a duty to take steps that ensure the asset or product is suitable—that is, appropriate for—that investor’s goals, needs, and
What Is a Sukuk? A sukuk is an Islamic financial certificate, similar to a bond in Western finance, that complies with Islamic religious law commonly known as Sharia. Since the traditional Western interest-paying bond structure is not permissible, the issuer of a sukuk essentially sells an investor group a certificate, and then uses the proceeds
What Is Summa Cum Laude? Summa cum laude is an honorary title used by educational institutions to signify a degree that was earned “with the highest distinction.” Summa cum laude indicates the greatest distinction of three commonly used types of academic honors recognized in the United States, expressed in Latin. The other two are called magna cum laude
What Is a Summary Plan Description? A Summary Plan Description (SPD) is a document that employers must give free to employees who participate in Employee Retirement Income Security Act-covered retirement plans or health benefit plans. The SPD is a detailed guide to the benefits the program provides and how the plan works. It must describe when employees become
What Is the Sum-of-the-Parts Valuation – SOTP? The sum-of-the-parts valuation (SOTP) is a process of valuing a company by determining what its aggregate divisions would be worth if they were spun off or acquired by another company. The valuation provides a range of values for a company’s equity by aggregating the standalone value of each
What Is the Sum of Squares? The term sum of squares refers to a statistical technique used in regression analysis to determine the dispersion of data points. The sum of squares can be used to find the function that best fits by varying the least from the data. In a regression analysis, the goal is
What Is Sundry Income? Sundry income is generated from sources other than a company’s normal income-generating business operations. This includes any income not generated by the sale of the company’s products and services. Sundry income is likely to be less predictable in nature than revenue from a business’s primary operations because the associated activities are
What Is a Sunk Cost? A sunk cost is money that has already been spent and cannot be recovered. In business, the axiom that one has to “spend money to make money” is reflected in the phenomenon of the sunk cost. A sunk cost differs from future costs that a business may face, such as
What Is a Sunrise Industry? Sunrise industry is a term that describes a burgeoning sector or business in its infancy stage that shows promise of a rapid boom. Sunrise industries have high growth rates, numerous start-ups, and high levels of venture capital funding. These industries generate a lot of interest for investors as long-term growth
What Is a Sunset Provision? A sunset provision, or sunset law, is a clause in a statute or regulation that expires automatically on a specified date. A sunset provision provides for an automatic repeal of the entire or sections of the law once that sunset date is reached. Once the sunset date is reached, the
