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Ultra Vires Act - An act performed without any legal
authority.
Ultradot - A proprietary software used to store and transmit baskets of
stock to either the NYSE or for program trading.
Unbiased Predictor - A theory that, in the future, spot prices with
equal today’s forward rates.
Unbundling - Refers to the transfer of funds, by a multinational
company, into separate units for different purposes.
Uncovered Call - A short call option position with the writer not owning
shares of underlying stock represented by his contracts. Also referred
to as naked calls.
Uncovered Interest Arbitrage - The assumption that an investor who
borrows in a low interest rate country, converts the funds to the
currency of a high interest rate country, and lends in that country will
not realize a profit or suffer a loss between forward and spot rates.
Uncovered Put - A short put option position where the writer does not
have cash equal to the exercise price of the put or a related short
stock position. Also referred to as naked puts.
Uncovered Writer - A call option writer who does not own or a put option
writer who is not short the underlying instrument.
Under-funded Pension Plan - A pension plan where liabilities exceed
assets.
Underlying - The item that is being exchanged by the parties involved in
a derivative contract.
Underlying Asset - In options trading the underlying asset is what the
holder has the right to buy or sell.
Underlying Security - The security is the item being bought or sold upon
the exercise of the option.
Underperform - Refers to performance or appreciation at a rate slower
than the market.
Underpricing - A security that is below its market value.
Undertaking for Collective Investment in Transferables - A proposal and
program for the regulation of unit trusts in the European Union.
Undervalued - The opinion that a stock is trading below the perceived
market value.
Underwrite - The act of bringing a security to market. To finance a
security by introducing an initial or secondary offering to market.
Underwriter - An investment banker who buys a new issue of securities
from an issuer and sells it to investors.
Underwriting Fee - The portion of the offering or underwriting spread
that an underwriting firm receives as compensation to underwrite an
offering.
Underwriting Income - The disparity between the costs of claims and
premiums earned for an insurance company.
Underwriting Syndicate - The syndicate is a collective of investment
banks that work together to sell initial or secondary security offerings
to investors.
Unemployment Rate - The number of unemployed people in comparison to the
labor force. Expressed as a ratio.
Uniform Acts - A series of model statutes recommended for implementation
by all states in the United States to provide a legal framework for
business and individuals.
Unilateral Margin Agreement - A collateralization arrangement in which
the counterparties with the lowest credit rating is required to post
initial margin.
Unique Risk - The risk that can be eliminated through diversification.
Unissued Stock - Shares of stock which have been authorized but not
distributed.
Unit - Refers to more than one class securities that is being traded
together.
Unit Benefit Formula - Is determined by multiplying the years of service
by a percentage of salary to determine the worth of the benefits in a
plan.
Unit Trust - A regulated investment company or mutual fund.
United Currency Options Market - A currency option system introduced by
the Philadelphia Stock Exchange.
Universal Hedge - A belief in portfolio currency risk management that
some currency hedging is appropriate and that one 'universal' hedging
ratio applies to all investors.
Universal Life - Refers to a whole life insurance product that pays an
interest rate as opposed to lower than market crediting.
Unleveraged Beta - The beta on a required return on investment when the
investment has been financed entirely by equity with no debt involved.
Unleveraged Required Return - The return when an investment is financed
entirely by equity.
Unlimited Liability - Full liability in all financial situations of a
legal body.
Unlisted Trading Privileges - A provision of many United States
securities exchanges' rules that allow an unlisted security to be traded
upon the request of one or more members.
Unmargined Spread - An option spread in which the short option is
margined separately from the long because of expiration disparity, price
relationships of the options, or one or both of the options are not
traded on an exchange.
Unmatched Book - A bank is said to have an unmatched book if the average
maturity of it’s liabilities is less than its asset value.
Unmatched Swap - A swap with no relationship to any specific asset or
liability of either party.
Unrealized Loss - A loss that is not yet recognized for tax or reporting
purposes.
Unrelated Business Income Tax - A tax imposed on tax-exempt entities in
the United States to prevent their non-exempt activities from
benefitting over tax-paying participants in similar enterprises.
Unseasoned Issue - A condition where an issued security has no existing
market.
Unsecured Debt - Refers to debt where no specific asset is identified
that can be acquired by the debt holder in the case of default.
Unwind a Trade - The practice of turning around a transaction through an
offsetting transaction.
Unwinding Risk - Risk that closing out a hedge position will be costly
or difficult.
Up Tick - A plus tick in terms of equities.
Up Tick Trade - Involves a trade that took place at a higher price than
the previous trade.
Up-and-Out Call - A call option that expires if an increase in the
underlying reaches an outstrike.
Up-and-Out Put - A put option that expires worthless if the market price
of the underlying rises above an outstrike price.
Up-Front Payment - The current value of the right to pay or receive the
fixed rate called for in a swap.
Up-Tick Rule - Rule that states that exchange-listed securities may not
be sold short unless the last trade prior to the short sale at a
different price was at a price lower than the price at which the short
sale is executed.
Upside Call - A call option that is out-of-the-money.
Upside Capture - The amount lost when hedging a portfolio with ownership
of put options when the overall value of the portfolio increases.
Upstairs Market - The network for institutional investors and brokerage
firms that allows them to communicate with each other via telephones and
electronic systems to make block and program trades.
US Treasury Bill - Government debt with a maturity of one year or less.
US Treasury Bond - Government debt with a maturity of 10 years or more.
US Treasury note - Government debt with a maturity between one and 10
years.
Useable Security - A bond that may be used as a replacement for cash in
the exercise of a warrant. The bond is par-adjusted in value.
Usury - Loaning money at an interest rate in excess of the maximum rate
by law.
Utility Value - The value an individual gives an investment based on an
expected return and risk. |
