Glossary

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Unamortized Bond Discount
The difference between the face value of a bond and the proceeds received from sale of the bond by the issuing company less whatever portion has been amortized (written off to expense as recorded periodically on the Profit and Loss Statement). A corporation has two choices at the time the bond is issued: the discount plus costs related to the issue (such as printing, legal, registration, etc.) can be absorbed immediately as an expense; or the total discount and expenses can be treated as a deferred charge, recorded as an asset and written off over the life of the bonds. The amount still to be expensed at any point is the unamortized bond discount.

Unamortized Premiums on Investments
The portion of the amount by which the price paid for a security exceeded its par value or market value. A premium paid in acquiring an investment is an intangible asset and conservative accounting practice dictates it be written off to expense over an appropriate time period.

Uncertainty
Refers to the variability of outcomes associated with a specific event or project. Uncertainty is used in a statistical sense when a decision maker has no historical information from which to develop a probability distribution.

Uncovered Call
A short call option position in which the writer does not own shares of underlying stock represented by his option contracts. Also called a "naked" call, it is much riskier for the writer than a covered call, where the writer owns the underlying stock. If the buyer of a call exercises the option to call, the writer would be forced to buy the stock at market price.

Uncovered Option
Refers to a short option that is not fully collateralized. A short call position is uncovered if the writer does not have long stock to deliver or does not own another call on the same security with a lower or same strike price and with a longer or same time of expiration. Also known as a naked option.

Uncovered Put
A short put option position in which the writer does not have a corresponding short stock position or has not deposited, in a cash account, cash or cash equivalents equal to the exercise value of the put. Also called naked puts, the writer has pledged to buy the stock at a certain price if the buyer of the options chooses to exercise it. The nature of uncovered options means the writer's risk is unlimited.

Uncovered Writer
A seller or writer who has sold stock or a stock option contract for stock that he or she does not own. Also referred to as a naked writer.

Underlying Instrument
A trading instrument subject to purchase upon exercise.

Underlying Securities
1. Options: The security subject to being purchased or sold upon exercise of an option contract. For example, IBM stock is the underlying security to IBM options.
2. Depository receipts: The class, series and number of the foreign shares represented by the depository receipt.

Undervalued
Refers to a security selling below the value the market value analysts believe it is worth, or below its liquidation value. Stock may be undervalued because of bad press about that sector of an industry or because of a company's history of erratic earnings, etc. Fundamental analysts spot companies that are undervalued so their clients can buy before stocks become fully valued. Undervalued companies may become targets of takeovers become assets can be acquired cheaply.

Underwriter (Securities)
Refers to the investment banker who alone or as a member of an underwriting group or syndicate agrees to purchase a new issue of securities from an issuer and distribute them to its investors, making a profit on the underwriting spread.

Underwriting
The procedure by which investment bankers channel investment capital from investors to corporations and municipalities that are issuing securities.

Underwriting Spread
Refers to the difference between the amount paid to an issuer of securities in a primary distribution and the public offering price. The amount of the spread varies widely depending upon the size of the issue, financial strength of the issuer, type of security involved, status of the security and the type of commitment made by the investment bankers.

Undigested Securities
Newly issued bonds and stock that remain undistributed because there is insufficient public demand at the offering price units. A package of different financial securities (such as shares, bonds, or warrants) that are issued together and have to be bought as a unit.

Univariate
Involving only one variable.

Unlisted
A stock not listed on a stock exchange but traded on the Over-The-Counter market.

Unlisted Securities
Refers to securities that are not listed on an organized exchange, such as the American Stock Exchange or the NY Stock Exchange. Unlisted securities are traded in over-the-counter markets.

Unlisted Trading
The trading of securities not listed on an organized exchange but traded on that exchange as an accommodation to the exchange's members. An exchange wanting to trade unlisted securities must file an application with the Securities Commission and make the necessary information available to the investing public.

Unsystematic Risk
Firm-specific risk that is unique to a security and hence can be eliminated by forming diversified portfolios.

Upside
The potential for prices to move up. Also the potential risk taken on a directional trade.

Upthrust
Occurs when price moves above a pivot top and a widespread reversal ensues as follows:
1. Two previous closes are reversed
2. Close is below pivot top
3. Close is below opening and mid-range
4. Daily price range is greater than the previous day's range.

Utility
A subjective measure of value or satisfaction. Measures an individual's relative value or preference for a particular outcome or event in relation to another. In finance, it is usually associated with measuring a decision-maker's preferences regarding monetary gains or losses.

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