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Date: Tuesday 13th 2008f May 2008 09:20:27 AM

Glossary
 

U
 

Unadjusted Basis:  Refers to the way a depreciation is calculated. Unadjusted basis ignores salvage value when depreciating an asset.

Our take: This method is common in calculating depreciation.

 

Unbundling: Refers to buying a big company with different business lines and then retaining the core business while selling off other assets to help finance the buyout. 

Our take: This means that the company was acquired mainly for its valuable business lines with little desire to expand other business lines.
 

Uncommited Facility: A credit facility without any commitment between the two parties.

Our take: In this scenario, the lenders do not have to borrow certain amount of money while borrower does not have to abide to the lenders' restrictions.
 

Under Reporting: An illegal activity where an individual reports income that is lower than it should be.
Our take: One reason to engage in this kind of activity is tax evasion. If caught by the authority, the penalty will be severe. 
 
Underpayment penalty: penalty imposed on individual paying less taxes that he should be.
Our take: To avoid underpayment penalty, taxpayers should pay 100% of last year's tax or 90 % of this year's tax amount.
 
Underperform: An analyst rating signifying that a specific stock will appreciate less than the overall market.
Our take: The overall market referred here is the S&P 500 index, which is the proxy for the broader market.
 
Undersubscribed : Term used for a demand for initial public offering that is less than the number of shares issued.
Our take: At this situation, the IPO price will normally be lowered to increase quantity demanded.
 
Undervalued : A security that is trading below its fair value.
Our take: The definition of fair value varies among investors. Each investor has their own 'acceptable' level of return on investment and therefore, there is ambiguity to the phrase 'fair value'.
 
Underwater: Out of the money option which cannot be monetized at present condition.
Our take: For call option, this means that the current stock price is lower than the call's strike price. For put option, this means that the current stock price is higher than the put's strike price. Underwater option would be worth zero if it expires today.
 
Underweight: Lower portfolio allocation for certain investment
Our take: If your portfolio is underweight in retail stocks, this indicates that you hold significantly less retail stocks on your portfolio than you would otherwise want to.
 
Underwriter: A company that acts as an intermediary between buyer and seller that offers stocks or bonds for public
Our take: When a company engages in an IPO, it will hire an underwriter to help it distribute the share to the public. In return, underwriter will charge the company an underwriting fee, usually 3-6% of the total valued of the stocks offered. 
 
Unearned Income: Any income that is not part of the business of a company
Our take: A pharmaceutical company would have an unearned income on the sale of its properties.
 
Unearned Revenue: Any money that is received before the actual good/service is being delivered or performed.
Our take: When a tenant pays rent for one year in advance, the landlord should book the money as unearned revenue. Unearned revenue is a liability until the service has been performed. 
 
Unearned Revenue: Any money that is received before the actual good/service is being delivered or performed.
Our take: When a tenant pays rent for one year in advance, the landlord should book the money as unearned revenue. Unearned revenue is a liability until the service has been performed. 
 
Unemployment Rate : The percentage of the labor force that doesn't have any job and are currently looking for a job.
Our take: Unemployment rate is considered a lagging indicator for the health of the economy
 
Unissued Stock : Shares that has been approved to be issued by board of director, but hasn't been monetized by the company.
Our take: When the shares have been issued, it will increase the number of shares outstanding for the company
 
Unit Cost : The cost of producing one unit of a product.
Our take: Unit cost includes both fixed and variable cost of the product. In general, company tries to grow bigger so that it can achieve economies of scale and reduce its unit cost.
 
Unit Sales : How much price one unit of product can be sold by a company
Our take: If a hotdog costs $ 5 each, then that hotdog has a unit sales of $ 5.
 
Universal Life Insurance : One type of life insurance where it offers the protection of term life insurance as well as savings element.
Our take: Insurance policy holder can switch the priority of between the insurance and savings component 
 
Unlimited Risk : The risk without a limit for its downside potential.
Our take: For example, when you short a stock, there is unlimited risk should the stock goes up hundred folds.
 
Unlisted Security : Security that is unlisted on the stock exchange.
Our take: Also known as Over The Counter (OTC), unlisted security has lower liquidity and higher bid-ask spread.
 
Unrealized Gain : Stock holding that has increased in value but is not yet cashed out
Our take: Investors should not count the egg before it was hatched. An unrealized gain can turn into a loss very quickly.
 
Unrealized Loss : Stock holding that has decreased in value but is not yet cashed out
Our take: If investors has not sold, the investment is not considered a loss.
 
Unsecured Creditor : Creditor that does not have collateral of the lender's asset
Our take: In bankruptcy proceeding, unsecured creditor will not have a sure chance of getting their money back.
 
Unsecured Loan : Loan that is obtained without giving an asset as collateral
Our take: An example of unsecured loan would be credit card debt. Lender can borrow money without having to offer his/her asset as a collateral. On the other hand, when you are mortgaging your house, the bank will demand your house as a collateral.
 
Utility : Refer to a company that distributes/transmit electricity, gas, water
Our take: Utility company normally has constant steady cash flow as its customer base is limited by geographical restrictions.
 
 

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