sohomghosh/FinRAD_Financial_Readability_Assessment_Dataset

terms stringlengths 1 156	definitions stringlengths 3 4.2k	source stringclasses 15 values	flesch_reading_ease float64 -301.79 121	flesch_kincaid_grade float64 -3.5 55.6	smog_index float64 0 26.5	coleman_liau_index float64 -33.81 51.4	automated_readability_index float64 -6.9 65	dale_chall_readability_score float64 0.1 35.3	linsear_write_formula float64 -0.5 73	gunning_fog float64 0.4 56
TURN	The difference between the BID and OFFER on a SECURITY, or the amount that a DEALER or MARKET MAKER can earn by buying at the bid and selling at the offer.	palgrave	56.93	13	0	6.34	13.1	7.72	17.5	13.69
TURNOVER	(1) In the United Kingdom, GROSS REVENUE. (2) The amount of TRADING volume on an EXCHANGE, in total or in a specific SECURITY. (3) The activity in a specific ASSET account, such as INVENTORY. (2) Also known as VOLUME.	palgrave	31.89	18.5	0	7.73	19.7	10.83	24.5	19.7
TWAP	See TIME WEIGHTED AVERAGE PRICE.	palgrave	66.4	5.2	0	9.6	7.4	10.2	2.5	10
TWIN-IN BARRIER OPTION	An OVER-THE-COUNTER COMPLEX OPTION that is created when an upper or lower BARRIER is breached. The inclusion of two barriers, which increase the probability of triggering, generally makes the structure more expensive than a standard KNOCK-IN OPTION. See alsoBARRIER OPTION, TWIN-OUT BARRIER OPTION.	palgrave	31.58	12.4	14.1	15.3	13.8	10.59	10.833333	14.09
TWIN-OUT BARRIER OPTION	An OVER-THE-COUNTER COMPLEX OPTION that is extinguished when an upper or lower barrier is breached. The inclusion of two barriers, which increases the probability of triggering, gener- ally makes the structure cheaper than a standard KNOCK-OUT OPTION. See also BARRIER OPTION, TWIN-IN BARRIER OPTION.	palgrave	39.63	11.4	13.6	14.55	13.4	10.47	10.666667	12.24
TWISTING	See CHURNING.	palgrave	77.91	2.9	0	1.3	7.8	11.63	0	0.8
TWO-FACTOR INTEREST RATE MODEL	An OPTION pricing model that values BOND options by generating an entire YIELD CURVE through two variables, such as a short-term rate and a drift or reversion factor. Although such models are more complex to calibrate and implement than ONE-FACTOR INTEREST RATE MODELS, they can generate more precise results.	palgrave	46.61	12.8	0	13.18	15.9	11.62	15.75	14.7
TWO-TIER BID	A TAKEOVER BID that features a more attractive price for INVESTORS willing to tender their SHARES by the first cutoff date; those choosing not to tender by a certain date are offered a less favorable deal. See also ANY-AND-ALL BID, FAIR PRICE PROVISION.	palgrave	66.57	9.3	0	10.39	12.4	8.74	12.25	11.39
TWO-WAY MARKET	See TWO-WAY PRICES.	palgrave	119.19	-2.7	0	3.43	6.8	9.05	0.5	1.2
TWO-WAY PRICES	A BID and an OFFER on an individual SECURITY as quoted by a MARKET MAKER or other DEALER. In certain cases institutions that choose to act as market makers must be prepared to quote two-way prices in all market conditions. Also known as MAKING A MARKET, TWO-WAY MARKET.	palgrave	55.24	9.5	9.7	8.52	8.4	8.38	8.333333	9.73
TYING	A practice where a BANK, INVESTMENT BANK, or SECURITIES FIRM grants a client a LOAN with a low MARGIN only if the client agrees to award it more lucrative financial business, such as an UNDERWRITING or CORPORATE FINANCE transaction. In some jurisdictions the practice con- stitutes a violation of fair trading practices and is illegal. See also REVERSE .	palgrave	51.89	10.8	13.6	11.6	12.3	10.86	13.166667	14.62
UBERRIMAE FIDEI	Literally “in utmost good faith;” a characteris- tic commonly applied to INSURANCE POLICIES, where the INSURED and INSURER disclose all relevant information and express intention to carry out their respective obligations in good faith.	palgrave	11.59	20.1	0	17.07	23.5	13.22	27	25.36
ULTIMATE NET LOSS	A computation performed by an INSURER that reflects the net economic loss sustained in INSURANCE activities, generally calculated via:UNL = – (Cl + LAE) + (Reins + Sal + Sub)where Cl is CLAIMS loss, LAE is LOSS ADJUSTMENT EXPENSE, Reins is recov- ery from REINSURANCE CONTRACTS in force, Sal is recovery from salvage value, and Sub is recovery from SUBROGATION rights.	palgrave	-2.29	27.5	0	13.77	32.5	14.87	42.5	30.26
UMBRELLA POLICY	An INSURANCE POLICY that provides the INSURED with additional coverage for specific LIABILITY and/or various named PERILS. The umbrella policy works in tandem with an insured’s existing policies to provide EXCESS LAYER coverage or ensure that any potential gaps that exist are appropriately filled.	palgrave	15.31	16.6	0	15.95	16.9	13.7	17.5	17.89
UMBRELLA REINSURANCE	A REINSURANCE CONTRACT that covers MULTIPLE PERIL POLICIES. All treaties written under the umbrella comprise a single block of business, so REINSURERS participating in the agreement can- not select which treaty to reinsure.	palgrave	46.27	10.9	0	15.31	14.1	10.68	10.75	11.45
UNAUTHORIZED INSURANCE	See NONADMITTED INSURANCE.	palgrave	-24.64	17.4	0	18.92	17.8	14.31	2.5	27.87
UNAUTHORIZED INSURER	See NONADMITTED INSURER.	palgrave	-24.64	17.4	0	15.03	14.6	14.31	2.5	27.87
UNBUNDLING	The process of decomposing and segregating individ- ual financial services offered by BANKS so that customers can more precisely take advantage of, and pay for, those services they actually require.	palgrave	32.57	16.2	0	15.21	20.1	12.49	22	21.33
UNCOMMITTED FACILITY	A CREDIT line granted by a BANK to a com- pany that can be withdrawn by the bank at will if it has not been drawn. Since the facility can easily be taken away, it is not considered a reliable source of financing. See also COMMITTED FUNDING.	palgrave	72.46	7.1	11.2	5.74	5.9	9.12	8.833333	11.39
UNDATED SECURITY	Any SECURITY that lacks a defined MATURITY, such as PERPETUAL DEBT, COMMON STOCK, and most forms of PREFERRED STOCK.	palgrave	52.19	10.7	0	11.43	12.4	12.06	12.5	13.92
UNDERBANKED	A future NEW ISSUE of SECURITIES with few INDICATI- ONS OF INTEREST, suggesting that the deal may be difficult for the SYNDICATE to place with INVESTORS unless pricing or other deal terms are altered.	palgrave	36.97	16.6	0	11.27	18.7	11.36	23	20.66
UNDERCAPITALIZATION	Any situation where a company lacks enough CAPITAL to support its operations on a continuing basis. Undercapitalization may result from large losses that deplete capital resources, or from growth in ASSETS that outpaces any capital-raising efforts.	palgrave	27.83	13.9	0	16.12	15.5	11.55	13	11.64
UNDERFUNDED PENSION PLAN	A form of FUNDED PENSION PLAN in which invested proceeds are insufficient to meet the requirements of future pensioners, primarily as a result of underperformance of the INVESTMENT PORTFOLIO underlying the pension.	palgrave	13.62	19.3	0	16.14	21.5	12.13	25	24.05
UNDERINSURANCE	(1) Insufficient INSURANCE to cover an INSURABLE RISK, leaving the INSURED exposed to financial loss. (2) Failure by the insured to meet COINSURANCE requirements specified by the INSURER. (1) See alsoOVERINSURANCE.	palgrave	23.09	17.7	0	15.85	22	12.81	24.5	24.01
UNDERINVESTMENT PROBLEM	A situation where a company in FINANCIAL DISTRESS is urged by CREDITORS to invest in projects with low RISKS and low RETURNS. Such INVESTMENTS are intended to protect the ASSET position of the firm for the benefit of creditors rather than maximize ENTERPRISE VALUE for the benefit of SHAREHOLDERS.	palgrave	38.15	14	0	12.25	14.7	10.65	18.75	17.96
UNDERLYING	The ASSET or market reference defining or underpinning a DERIVATIVE contract.	palgrave	18.01	13.5	0	16.34	12.8	12.79	7.5	15.31
UNDERPERFORMANCE OPTION	An OVER-THE-COUNTER COMPLEX OPTION that grants the buyer a PAYOFF based on the underperformance of a market reference or SPREAD against a predefined STRIKE PRICE. See alsoOUTPERFORMANCE OPTION, SPREAD OPTION.	palgrave	47.79	10.3	0	15.77	14.2	10.17	9	11.33
UNDERSTANDABILITY	A principle of ACCOUNTING indicating that finan- cial terms and information must be presented in a way that can be under- stood by an individual with some degree of business knowledge, that it should include essential information and should not include irrelevant or overly U detailed information.	palgrave	6.85	24	0	14.12	27.2	11.68	33.5	25.61
UNDERSUBSCRIPTION	A situation where the number of ORDERS for a NEW ISSUE of SECURITIES is lower than the available SUPPLY, suggesting the price of the security could decline at launch. Depending on the nature of the CAPITAL commitment, the UNDERWRITERS may take up a shortfall in orders. See also OVERSUBSCRIPTION.	palgrave	46.47	10.8	13	11.19	10.6	9.92	11.166667	13.05
UNDERWATER	(1) A market situation where an OPTION is so far OUT- OF-THE-MONEY that it is virtually worthless. (2) An INVESTMENT positionwith a MARKET VALUE that is below BOOK VALUE or carrying value, and which will crystallize a loss if sold.	palgrave	30.88	18.9	0	9.7	21.2	9.57	26	22
UNDERWRITER	(1) A FINANCIAL INSTITUTION involved in UNDERWRI- TING a NEW ISSUE of SECURITIES. (2) An INSURER or REINSURER that anal- yzes, prices, and accepts or rejects INSURABLE RISKS. (1) See also SYNDICATE.	palgrave	30.54	17	0	11.21	19.2	14.6	24	22.8
UNDERWRITER’S LIABILITY	The LIABILITY an UNDERWRITER faces in arranging and issuing SECURITIES for a company. If DUE DILIGENCE has not been performed (or has been performed with errors), or if financial disclosure contained in the PROSPECTUS is incorrect, INVESTORS holding securities that ultimately DEFAULT may be able to recover their losses from the underwriter.	palgrave	28.17	15.8	0	14.8	17.9	11	19.5	18.09
UNDERWRITING	(1) In the SECURITIES industry, the process of issuing NOTES, BONDS, CONVERTIBLE BONDS, COMMON STOCK, or PREFERRED STOCK in the PRIMARY MARKET on behalf of an ISSUER. (2) In the banking and INSURANCE industries, the process of thoroughly evaluating a RISK expos- ure and determining whether anticipated profitability is commensurate with EXPECTED LOSS. In banking this is often done through CREDIT analysis; in insurance it is accomplished through ACTUARIAL PRICING and analysis. (1) See also ALL-OR-NONE , BEST EFFORTS , BOUGHT DEAL.	palgrave	13.96	21.3	0	14.57	25.2	12.33	30	24.5
UNDERWRITING AGREEMENT	See SYNDICATE AGREEMENT.	palgrave	34.59	9.2	0	15.03	14.6	14.31	1.5	14.53
UNDERWRITING INCOME	In INSURANCE, the net amount earned from core insurance UNDERWRITING activities, typically computed as:UI = Pr – (IL + LAE + UE + Div)where Pr is PREMIUM, IL is INCURRED LOSSES, LAE is LOSS ADJUSTMENT EXPENSES, UE is underwriting EXPENSE, and Div is policyholder DIVIDENDS.	palgrave	4.48	22.8	0	14	25.4	14.14	34.5	26.16
UNDERWRITING RISK	(1) The RISK that a SYNDICATE of BANKS or SECURITIES FIRMS UNDERWRITING a NEW ISSUE on a BOUGHT DEAL basis will be unable to place securities with INVESTORS, indicating that they will be required to fund any shortfall from their own resources. (2) The risk that the PREMIUM an INSURER charges INSUREDS will prove insufficient to cover future losses, and that losses and LOSS ADJUSTMENT EXPENSES will not be properly covered by RESERVES.	palgrave	-2.63	31.8	0	12.21	38.6	13.53	47.5	34.68
UNDERWRITING SPREAD	In a NEW ISSUE, the difference between the amount paid by the SYNDICATE to the ISSUER and the price at which SECURITIES are offered to INVESTORS. The spread varies by issuer, class of issue, market conditions, and marketplace, and can range from 4% to 7% for COMMON STOCK to less than 1% for NOTES and BONDS. Also known as GROSS SPREAD, SPREAD. See also SELLING CONCESSION.	palgrave	71.65	7.4	10.1	8.35	8.8	9	8.75	9.63
UNDISCLOSED FACTORING	A form of FACTORING where the under- lying does not want the presence of a factor to be revealed. Apart from thisconfidentiality, the roles of seller and factor remain the same as in a conven- tional factoring arrangement.	palgrave	52.19	10.7	0	10.21	11	8.73	11.5	10.76
UNDISTRIBUTABLE RESERVES	In the United Kingdom, that portion of CAPITAL that cannot be distributed, including SHARE CAPITAL, the SHARE PREMIUM, and certain other RESERVES and unrealized profit accounts. See also RESTRICTED SURPLUS.	palgrave	30.87	12.7	0	15.19	13.9	9.64	11	12.67
UNDUE INFLUENCE	Any form of influence that can be interpreted as coer- cion in the preparation and execution of a CONTRACT, and which may render the contract null and void by a court.	palgrave	48.47	14.2	0	8.37	14.9	10.27	19.5	17.56
UNEARNED PREMIUM RESERVE	A RESERVE that contains a portion of the advance PREMIUM paid by an INSURED to an INSURER (or a CEDING INSURER to REINSURER) to cover the amount of INSURANCE (or REINSURANCE) that is still in force. Since premiums are normally charged at the inception of a policy but potential LIABILITY exists until the policy terminates, the reserve reflects the amount needed to cover EXPECTED LOSS prior to expiry. The amount of the reserve associated with a specific policy declines as contract expiry draws closer.	palgrave	34.6	15.4	17.1	11.55	16.2	11.04	20	18.34
UNEMPLOYMENT	Lack of employment for able workers, and a key measure of the state of an ECONOMY in the BUSINESS CYCLE. During recovery and growth phases unemployment is low as demand for productive labor increases; during slowdown and RECESSION phases unemployment rises as demand for labor declines in line with reduced economic output.	palgrave	36.63	14.6	0	12.89	16.2	11	17.5	16.55
UNEXPECTED CREDIT LOSS	The difference between EXPECTED CREDIT LOSS and WORST-CASE CREDIT LOSS; alternatively, the difference between the MEAN of the credit loss distribution function and a point represented by multiple STANDARD DEVIATIONS from the mean.	palgrave	21.06	18.5	0	17.42	23.3	9.58	24.5	20.47
UNFAIR PREFERENCE	The transfer of ASSETS or the payment of sums to a CREDITOR by a party that is about to declare BANKRUPTCY. Such a transfer may be declared void by the courts and be subject to CLAWBACK.	palgrave	70.13	8	0	6.44	7.3	8.92	9	9.42
UNFUNDED PENSION PLAN	A PENSION SYSTEM in which current employ- ees pay for the benefits of existing pensioners (e.g., pay as you go). See alsoFUNDED PENSION PLAN, UNDERFUNDED PENSION PLAN.	palgrave	49.31	9.7	0	10.49	9.9	11.32	8.25	12.81
UNIFORM PRICE AUCTION	A type of AUCTION MARKET in which buyers submit BIDS reflecting the price they will pay for a given quantity of an item. The orders are then allocated from highest to lowest, until the total SUPPLY of items is exhausted. Thereafter, bidders pay a per unit price that is equal to the lowest winning bid, rather than the original bid submitted.A COLLATERAL agreement where only required to post SECURITY; this generally COUNTERPARTIES to a transaction has amaterially lower CREDIT RATING than the second party. See also BILATERAL COLLATERAL.	palgrave	40.69	13.1	13.8	11.89	13.8	11.01	14.5	14.71
UNINCORPORATED BUSINESS	Any form of business organization where the owner bears UNLIMITED LIABILITY for any DEBTS incurred.	palgrave	30.87	12.7	0	14.61	12.8	10.7	10.5	14
UNINSURABLE RISK	A RISK that cannot be covered by INSURANCE as it fails to meet the standard requirements set forth for an INSURABLE RISK, i.e., the risk can produce a loss that is not definable or fortuitous, or the risk is catastrophic and cannot be transferred through payment of an economically reasonable PREMIUM. Also known as PROHIBITED RISK.	palgrave	43.06	14.2	0	10.97	15.9	9.82	19	18.34
UNISSUED STOCK	COMMON STOCK that is authorized for issuance through a firm’s CORPORATE CHARTER, but has not yet been floated; unissued stock stands in contrast to TREASURY STOCK, which is issued but no longer outstanding.(3) See CLOSED-END FUND.	palgrave	51.86	15	0	13.41	22.1	12.88	21	17.73
UNLIMITED COMPANY	A form of corporate organization in which SHAREHOLDERS do not benefit from the tenet of LIMITED LIABILITY.	palgrave	28.84	13.5	0	12.82	12	10.98	14.5	20.92
UNLIMITED LIABILITY	A concept and structure where the personal ASSETS of INVESTORS, GENERAL PARTNERS, or sole proprietors are at RISK in the event of a business loss; the extent of financial LIABILITY is notbounded as it is in a LIMITED LIABILITY company. See also PIERCING THE CORPORATE VEIL.	palgrave	39.67	13.4	0	11.15	13.4	10.61	16.5	15.29
UNLIQUIDATED DAMAGES	DAMAGES awarded to a plaintiff that can only be estimated ex-post by the courts. See also LIQUIDATED DAMAGES, STATUTORY DAMAGES.	palgrave	44.41	9.6	0	11.69	9.2	10.45	5.5	10
UNLISTED SECURITY	Any SECURITY that is not formally listed on an EXCHANGE, and which need not comply with exchange rules related to dis- closure. Unlisted securities are typically issued by small companies and are very ILLIQUID.	palgrave	45.76	11.1	0	11.95	11.6	10.98	12	15.04
UNMATCHED BOOK	A PORTFOLIO of ASSETS and LIABILITIES (such as the LOANS and DEPOSITS of a BANK, or the REPURCHASE AGREEMENTS and REVERSE REPURCHASE AGREEMENTS of a SECURITIES FIRM), with unequal MATURITIES or DURATIONS. An unmatched book increases an institution’s exposure to MARKET RISK and/or LIQUIDITY RISK, but provides for the possibility of a greater RETURN on CAPITAL. See also GAP, GAPPING, MATCHED BOOK, MISMATCH, OPEN BOOK.	palgrave	40.99	12.9	15	13.23	15.1	11.03	15.166667	15.45
UNQUALIFIED OPINION	An AUDIT OPINION by an EXTERNAL AUDITOR indicating that a company’s FINANCIAL STATEMENTS present a fair and accurate view of its financial position and conform to accepted ACCOUNTING PRINCIPLES. Also known as CLEAN OPINION. See also ADVERSE OPINION, QUALIFIED OPINION.	palgrave	32.6	12	14.6	14.49	12.2	10.61	10.666667	16.32
UNREALIZED GAIN	Gains on an ASSET (resulting from a positive change in valuation) that have not yet been realized or “locked in” for ACCOUNTING purposes. An unrealized profit can only be realized through disposal or estab- lishment of a HEDGE. Also known as PAPER PROFIT. See also REALIZED GAIN,UNREALIZED LOSS.	palgrave	50.84	9.2	12.6	10.83	8.9	9.17	7.75	11.47
UNREALIZED LOSS	Losses on an ASSET (resulting from a negative change in valuation) that have not yet been realized or “locked in” for ACCOUNTING purposes. An unrealized loss can only be realized through disposal. Also known as PAPER LOSS. See also REALIZED LOSS, UNREALIZED GAIN.	palgrave	52.05	8.7	12.6	10.42	8.2	8.21	7.125	11.76
UNREGISTERED STOCK	STOCK that is not registered with the relevant SECURITIES REGULATOR and which cannot therefore be TRADED on a public basis.	palgrave	34.26	13.5	0	12.59	13.1	10.16	14	16
UNSECURED	A financing or LIABILITY that is not backed by any type of support, e.g., no COLLATERAL or GUARANTEE. See also SECURED.	palgrave	52.36	8.6	0	6.93	6	11.68	6.25	11.82
UNSECURED CREDITOR	A CREDITOR that has lent MONEY to an indi- vidual or company without taking any COLLATERAL as SECURITY. See alsoSECURED CREDITOR, UNSECURED DEBT.	palgrave	25.96	12.5	0	11.52	9.5	10.39	8.75	15.03
UNSECURED DEBT	A BOND or LOAN without any COLLATERAL back- ing; the sole source of repayment for INVESTORS or LENDERS comes from the DEBTOR’S financial resources. Unsecured debt is most common among BORROWERS/ISSUERS with strong CREDIT RATINGS. See also SECURED DEBT.	palgrave	66.74	7.2	10.5	12.75	10.9	11.97	7.166667	10.33
UNWIND	The process of settling two or more DERIVATIVE transactions between two COUNTERPARTIES in order to reduce CREDIT RISK exposures and crystallize any MARK-TO-MARKET gain or loss. The unwinding process terminates all affected CONTRACTS and is thus a more efficient method than entering into BACK-TO-BACK SWAPS.	palgrave	40.18	13.2	0	16.13	17.3	11.42	17.25	17.89
UNWIND PRICE	See TEAR-UP PRICE.	palgrave	119.19	-2.7	0	1.52	5.2	0.15	0.5	1.2
UP AND IN OPTION	A COMPLEX OPTION that creates a standard EUROPEAN OPTION if the price of the UNDERLYING market reference rises above a predefined BARRIER. See also BARRIER OPTION, DOWN AND IN OPTION, DOWN AND OUT OPTION, KNOCK-IN OPTION, REVERSE KNOCK-IN OPTION, UP AND OUT OPTION.	palgrave	41.19	12.9	0	11.6	13.8	8.74	13.75	13.25
UP AND OUT OPTION	A COMPLEX OPTION that extinguishes a stand- ard EUROPEAN OPTION if the price of the UNDERLYING market reference rises above a predefined BARRIER. If the barrier is not breached the European option remains in effect. See also BARRIER OPTION, DOWN AND IN OPTION, DOWN AND OUT OPTION, KNOCK-OUT OPTION, REVERSE KNOCK-OUT OPTION, UP AND IN OPTION.	palgrave	44.03	11.8	13	11.43	12.1	8.51	12.333333	11.77
UPFRONT COLLATERAL	A process where an institution takes initial COLLATERAL from its COUNTERPARTY in an amount sufficient to cover expected POTENTIAL EXPOSURE for the entire life of the transaction. Under this arrangement no periodic evaluations or collateral calls are required. See also PERIODIC COLLATERAL.	palgrave	23.43	13.5	15.5	15.94	13.4	10.72	11.666667	16.08
UPSTAIRS MARKET	TRADES executed through a BROKER/DEALER, or between two broker/dealers, that do not flow through an EXCHANGE. Upstairs market transactions cannot occur at prices that are prejudicial to cus- tomers. See also CROSSED TRADE.	palgrave	60.31	7.6	10.5	13.55	11.2	9.92	6.166667	8.04
UPSTREAM	(1) The process of channeling funds from a SUBSIDIARY to a PARENT or HOLDING COMPANY. This may occur when the parent or holding company is restricted in some way from raising funds directly. (2) The segment of the energy industry that is focused on exploration, extraction, and produc- tion. See also DOWNSTREAM.	palgrave	53.92	10	13	10.32	10.9	10.57	11.666667	12.3
UPTICK	See PLUS TICK.	palgrave	119.19	-2.7	0	-4.29	-1.2	9.05	0.5	1.2
UPTICK RULE	A rule imposed by the SECURITIES AND EXCHANGE COMMISSION that only permits a SHORT SALE in a SECURITY or INDEX ARBITRAGE program to be initiated on a PLUS TICK or ZERO PLUS TICK. The rule is intended to halt a self-fulfilling downward spiral, where each downtick leads to further short selling.	palgrave	45.59	13.2	0	10.33	13.8	10.47	16.25	15.69
USANCE	The time period during which a BILL OF EXCHANGE must be paid.	palgrave	84.68	4.4	0	5.5	4.2	5.55	6	8.13
USURY	The practice of charging an excessive INTEREST RATE on any class of DEBT or LIABILITY; in many national systems usury is prohibited by law through the establishment of maximum interest rate ceilings.	palgrave	22.08	18.1	0	13.41	19.3	11.64	24	21.55
UTILIZATION RATE	The portion of a REVOLVING CREDIT FACILITY that is drawn down by the BORROWER, and which must be repaid according to scheduled terms.	palgrave	48.13	12.3	0	10.51	12.8	11.64	15.5	16.16
VALORIZATION	A process used by a government authority to artifi- cially support or increase the price of an ASSET or COMMODITY, often by constraining SUPPLY.	palgrave	30.2	15	0	11.55	14.3	11.41	17	16.27
VALUATION	See CORPORATE .	palgrave	-6.7	14.7	0	4.2	10.2	11.63	1.5	20.8
VALUE-ADDED TAX (VAT)	An indirect TAX applied in certain national sys- tems that is payable by producers and consumers of goods and services. A tax is levied on each incremental stage of the production process that adds value to the good or service being produced. See also AD VALOREM.VAR1−α(rp ) = − min{z \| ( P(rp ≤ z) > α)}where rp is the return on a portfolio of assets, P is the probability, 1 – α is the confidence level (e.g., α set to 1% or 5%), z is the relevant Z-SCORE. See alsoBACKTESTING, EXTREME VALUE THEORY, MAXIMUM LOSS, PROFIT AND LOSS EXPLAIN.	palgrave	55.78	11.4	13.4	8.07	12.3	11.13	15.75	14.57
VALUE CHAIN	A sequence of linked activities supporting the production of a good, where each activity adds a particular value to the end product. Common value chain activities include logistics, production, marketing, and distribution, along with supporting functions such as research and develop- ment, human resources, and technology.	palgrave	22.75	15.8	0	16.83	18.5	11.99	18	17.9
VALUE DATE	The date on which funds become GOOD MONEY, or a SECURITIES or FOREIGN EXCHANGE transaction is settled. Also known asSETTLEMENT DATE.	palgrave	52.36	8.6	0	11.34	8.9	8.67	5.75	9.91
VALUED CONTRACT	An INSURANCE POLICY that provides the INSURED with a stated payout amount, agreed on an ex-ante basis, in the event of a loss. Valued contracts are generally associated with life insurance policies, which specify a certain sum payable to the BENEFICIARY upon the death of the insured. See also INDEMNITY CONTRACT.	palgrave	45.76	11.1	12.5	11.54	11.4	10.98	11.166667	12.29
VANILLA	A standard or conventional financial transaction, rather than one with esoteric or complex parameters, RISKS, or PAYOFF profiles.Since vanilla transactions are common, they tend to feature the greatest LIQUIDITY and the narrowest BID-OFFER SPREADS. Also known as PLAIN VANILLA.	palgrave	26.3	14.4	0	17.06	17.2	12.3	14.75	16.01
VAR	See VALUE-AT-RISK.	palgrave	77.91	2.9	0	10	19.6	11.63	0	0.8
VARIABLE ANNUITY	An ANNUITY where PREMIUMS received from the INVESTOR are used to purchase accumulation units with variable value deter- mined by the worth of the SECURITIES in the INSURER’s INVESTMENT PORTFOLIO. When the benefits are ultimately paid to the ANNUITANT, units are converted into a fixed number, crystallizing the payout.	palgrave	29.69	15.2	0	14.39	16.8	11.62	18.25	19.6
VARIABLE COST	An expense that changes in proportion to a company’s output, increasing as output increases and decreasing as output decreases (e.g., raw materials used in production). Variable cost is one of two elements, along with FIXED COST, which comprise TOTAL COSTS. It can also be computed as the sum of the MARGINAL COSTS.	palgrave	53.92	10	14.1	10.67	11.2	10.87	12.333333	15.38
VARIABLE LIFE ASSURANCE	In the United Kingdom, form of life ASSURANCE in which PREMIUMS are invested in UNIT TRUSTS and where the amount of coverage can be altered by the INSURED. See also VARIABLE LIFE INSURANCE.	palgrave	63.19	8.5	0	9.51	9.2	9.24	10.75	12.66
VARIABLE LIFE INSURANCE	In the United States, a form of whole life INSURANCE in which PREMIUMS are invested in a range of SECURITIES on a TAX-deferred basis. Since the policy features standard INVESTMENT RISKS it is treated as a form of security and sold with a PROSPECTUS. See also VARIABLE LIFE ASSURANCE.	palgrave	54.93	9.6	12.5	9.63	9.3	9.92	10.833333	13.05
VARIABLE LIMIT	A provision in a PROPERTY AND CASUALTY INSU- RANCE POLICY that automatically increases the size of the INSURED’s limit at each anniversary date, to coincide with increased value attributable to the underlying property being insured. The insured retains the sole right not to increase the limit on each specified date.CERTIFICATE OF DEPOSIT.	palgrave	19.71	17	0	14.68	17.8	11	19.5	19.63
VARIABLE RATE DEMAND NOTE	A NOTE issued by a BANK that pays a FLOATING RATE based on PRIME RATE or LIBOR, and which is redeemable on demand by the INVESTOR.	palgrave	78.93	8.7	0	5.98	10.6	10.39	13	10.4
VARIABLE RATE MORTGAGE	In the United Kingdom, an ADJUSTABLE RATE MORTGAGE.	palgrave	71.82	5.2	0	10.8	8.5	7.98	3	3.2
VARIABLE RATE NOTE (VRN)	A form of FLOATING RATE NOTE where both the reference INTEREST RATE (e.g., LIBOR, EURIBOR) and the MARGIN over the reference are adjusted at periodic intervals, generally every quarter. The resetting of the margin is a function of SUPPLY and DEMAND conditions, as well as the market perception of the ISSUER’s CREDITWORTHINESS.STOCK.	palgrave	28.17	15.8	0	13.23	17.1	11	19	18.86
VARIANCE	A measure of RISK, variability, or dispersion, reflecting the mag- nitude by which an outcome differs from the EXPECTED VALUE, or the degree to which an observation deviates from the MEAN of a distribution. Variance, which is the second MOMENT about the mean and equal to the STANDARD DEVIATION squared, can be computed as:⎣⎦where xi is an observation, μ is the mean, and N is the number of observations.	palgrave	36.46	16.7	0	10.57	18.8	10.38	22.75	19.6
VARIANCE/COVARIANCE MATRIX	A matrix of COVARIANCES between the variables in a vector, reflecting VARIANCES on the diagonal and covari- ances on the off-diagonal. The matrix is commonly used in PORTFOLIO ana- lysis and VALUE-AT-RISK computations. The general form of a two-variable matrix is given as:σ2⎣where x, y are variables, cov is the covariance between the variables and σ2 is the variance of each variable.greater than implied volatility, and losses are smaller when the reverse occurs). Variance swaps are often used in the EQUITY and FOREIGN EXCHANGE mar- kets. See also REALIZED VOLATILITY SWAP.(1) See also INITIAL MARGIN, CLEARING MARGIN.	palgrave	43.32	12	12.7	12.88	13.8	11.11	12.5	11.88
VAT	See VALUE-ADDED TAX.	palgrave	93.81	0.9	0	5.35	8.3	9.05	0.5	1.2
VEGA	The change in the value of an OPTION for a change in VOLATILITY, with all other variables held constant. The vegas of the CALL OPTION and PUT OPTION computed under the BLACK-SCHOLES MODEL (which are equiva- lent) are given by:N’(d ) =12pand S is the STOCK price, t is the time to MATURITY, σ is the STANDARD DEVIATION, and where the value of N’(d1) can be obtained from a standard table of PROBABILITY functions.The vegas of long and short puts and calls are shown as:Also known as KAPPA, LAMBDA. See also DELTA, GREEKS, THETA, RHO,GAMMA.	palgrave	48.17	14.3	11.2	9.24	16.5	10.73	17.833333	14.65
VEGA NEUTRAL	A PORTFOLIO of OPTIONS that is neutral with respect to its VEGA, meaning that it is HEDGED against moves in VOLATILITY. See alsoDELTA NEUTRAL, GAMMA NEUTRAL, THETA NEUTRAL.	palgrave	65.73	7.6	0	11.13	10	11.1	7	8.46
VELOCITY OF MONEY	The average number of times a given unit or amount of MONEY in a system changes hands (or is spent) over a defined time period. Velocity is used in various economic theories, such as the QUANTITY THEORY OF MONEY. Also known as VELOCITY OF CIRCULATION.	palgrave	47.79	10.3	13.6	8.05	7.7	9.64	10.833333	14
VERTICAL LAYERING	A practice where different REINSURERS assume the RISK of different loss layers under an EXCESS OF LOSS (XOL) REINSURANCE agreement. Each reinsurer becomes liable for its own layer of coverage between a specific ATTACHMENT level and individual POLICY CAP. Under this approach not every reinsurer is susceptible to losses and CLAIMS once the underlying DEDUCTIBLE is exceeded; the higher vertical layers may not be exposed unless the losses are large. See also EXCESS LAYER, HORIZONTAL LAYERING.	palgrave	35.27	13.1	14.9	13.98	14	10.81	13.75	14.97
VERTICAL MERGER	A MERGER between companies that represent differ- ent components or stages of the service or industrial process. A vertical merger may be arranged if a company wishes to control or influence the majority of the processes that are used in the production of goods and services, including raw material extraction, processing, production, warehousing, transporting, shipping, and retailing. See also CONGLOMERATE MERGER, HORIZONTAL MERGER.	palgrave	24.78	15	17.9	15.95	17	11.7	17.166667	19.83
VERTICAL SPREAD	See BEAR SPREAD, BULL SPREAD.	palgrave	117.16	-1.9	0	4.96	4.6	0.25	1.5	2
VESTED BENEFIT	A benefit, such as a PENSION or STOCK ownership inter- est, that is owed by a company to an employee, and which the employee is entitled to if he/she departs.	palgrave	49.49	13.8	0	7.09	13.8	9.86	21	17.33
VESTED INTEREST	A right of ownership in, and use of, an ASSET on an immediate basis, and which is not dependent on the outcome of a future event.	palgrave	62.01	11.1	0	5.35	10.4	9.78	16	15.02

TURN

The difference between the BID and OFFER on a SECURITY, or the amount that a DEALER or MARKET MAKER can earn by buying at the bid and selling at the offer.

palgrave

0

56.93

13

0

6.34

13.1

7.72

17.5

13.69

TURNOVER

(1) In the United Kingdom, GROSS REVENUE. (2) The amount of TRADING volume on an EXCHANGE, in total or in a specific SECURITY. (3) The activity in a specific ASSET account, such as INVENTORY. (2) Also known as VOLUME.

palgrave

0

31.89

18.5

0

7.73

19.7

10.83

24.5

19.7

TWAP

See TIME WEIGHTED AVERAGE PRICE.

palgrave

0

66.4

5.2

0

9.6

7.4

10.2

2.5

10

TWIN-IN BARRIER OPTION

An OVER-THE-COUNTER COMPLEX OPTION that is created when an upper or lower BARRIER is breached. The inclusion of two barriers, which increase the probability of triggering, generally makes the structure more expensive than a standard KNOCK-IN OPTION. See alsoBARRIER OPTION, TWIN-OUT BARRIER OPTION.

palgrave

0

31.58

12.4

14.1

15.3

13.8

10.59

10.833333

14.09

TWIN-OUT BARRIER OPTION

An OVER-THE-COUNTER COMPLEX OPTION that is extinguished when an upper or lower barrier is breached. The inclusion of two barriers, which increases the probability of triggering, gener- ally makes the structure cheaper than a standard KNOCK-OUT OPTION. See also BARRIER OPTION, TWIN-IN BARRIER OPTION.

palgrave

0

39.63

11.4

13.6

14.55

13.4

10.47

10.666667

12.24

TWISTING

See CHURNING.

palgrave

0

77.91

2.9

0

1.3

7.8

11.63

0

0.8

TWO-FACTOR INTEREST RATE MODEL

An OPTION pricing model that values BOND options by generating an entire YIELD CURVE through two variables, such as a short-term rate and a drift or reversion factor. Although such models are more complex to calibrate and implement than ONE-FACTOR INTEREST RATE MODELS, they can generate more precise results.

palgrave

0

46.61

12.8

0

13.18

15.9

11.62

15.75

14.7

TWO-TIER BID

A TAKEOVER BID that features a more attractive price for INVESTORS willing to tender their SHARES by the first cutoff date; those choosing not to tender by a certain date are offered a less favorable deal. See also ANY-AND-ALL BID, FAIR PRICE PROVISION.

palgrave

0

66.57

9.3

0

10.39

12.4

8.74

12.25

11.39

TWO-WAY MARKET

See TWO-WAY PRICES.

palgrave

0

119.19

-2.7

0

3.43

6.8

9.05

0.5

1.2

TWO-WAY PRICES

A BID and an OFFER on an individual SECURITY as quoted by a MARKET MAKER or other DEALER. In certain cases institutions that choose to act as market makers must be prepared to quote two-way prices in all market conditions. Also known as MAKING A MARKET, TWO-WAY MARKET.

palgrave

0

55.24

9.5

9.7

8.52

8.4

8.38

8.333333

9.73

TYING

A practice where a BANK, INVESTMENT BANK, or SECURITIES FIRM grants a client a LOAN with a low MARGIN only if the client agrees to award it more lucrative financial business, such as an UNDERWRITING or CORPORATE FINANCE transaction. In some jurisdictions the practice con- stitutes a violation of fair trading practices and is illegal. See also REVERSE .

palgrave

0

51.89

10.8

13.6

11.6

12.3

10.86

13.166667

14.62

UBERRIMAE FIDEI

Literally “in utmost good faith;” a characteris- tic commonly applied to INSURANCE POLICIES, where the INSURED and INSURER disclose all relevant information and express intention to carry out their respective obligations in good faith.

palgrave

0

11.59

20.1

0

17.07

23.5

13.22

27

25.36

ULTIMATE NET LOSS

A computation performed by an INSURER that reflects the net economic loss sustained in INSURANCE activities, generally calculated via:UNL = – (Cl + LAE) + (Reins + Sal + Sub)where Cl is CLAIMS loss, LAE is LOSS ADJUSTMENT EXPENSE, Reins is recov- ery from REINSURANCE CONTRACTS in force, Sal is recovery from salvage value, and Sub is recovery from SUBROGATION rights.

palgrave

0

-2.29

27.5

0

13.77

32.5

14.87

42.5

30.26

UMBRELLA POLICY

An INSURANCE POLICY that provides the INSURED with additional coverage for specific LIABILITY and/or various named PERILS. The umbrella policy works in tandem with an insured’s existing policies to provide EXCESS LAYER coverage or ensure that any potential gaps that exist are appropriately filled.

palgrave

0

15.31

16.6

0

15.95

16.9

13.7

17.5

17.89

UMBRELLA REINSURANCE

A REINSURANCE CONTRACT that covers MULTIPLE PERIL POLICIES. All treaties written under the umbrella comprise a single block of business, so REINSURERS participating in the agreement can- not select which treaty to reinsure.

palgrave

0

46.27

10.9

0

15.31

14.1

10.68

10.75

11.45

UNAUTHORIZED INSURANCE

See NONADMITTED INSURANCE.

palgrave

0

-24.64

17.4

0

18.92

17.8

14.31

2.5

27.87

UNAUTHORIZED INSURER

See NONADMITTED INSURER.

palgrave

0

-24.64

17.4

0

15.03

14.6

14.31

2.5

27.87

UNBUNDLING

The process of decomposing and segregating individ- ual financial services offered by BANKS so that customers can more precisely take advantage of, and pay for, those services they actually require.

palgrave

0

32.57

16.2

0

15.21

20.1

12.49

22

21.33

UNCOMMITTED FACILITY

A CREDIT line granted by a BANK to a com- pany that can be withdrawn by the bank at will if it has not been drawn. Since the facility can easily be taken away, it is not considered a reliable source of financing. See also COMMITTED FUNDING.

palgrave

0

72.46

7.1

11.2

5.74

5.9

9.12

8.833333

11.39

UNDATED SECURITY

Any SECURITY that lacks a defined MATURITY, such as PERPETUAL DEBT, COMMON STOCK, and most forms of PREFERRED STOCK.

palgrave

0

52.19

10.7

0

11.43

12.4

12.06

12.5

13.92

UNDERBANKED

A future NEW ISSUE of SECURITIES with few INDICATI- ONS OF INTEREST, suggesting that the deal may be difficult for the SYNDICATE to place with INVESTORS unless pricing or other deal terms are altered.

palgrave

0

36.97

16.6

0

11.27

18.7

11.36

23

20.66

UNDERCAPITALIZATION

Any situation where a company lacks enough CAPITAL to support its operations on a continuing basis. Undercapitalization may result from large losses that deplete capital resources, or from growth in ASSETS that outpaces any capital-raising efforts.

palgrave

0

27.83

13.9

0

16.12

15.5

11.55

13

11.64

UNDERFUNDED PENSION PLAN

A form of FUNDED PENSION PLAN in which invested proceeds are insufficient to meet the requirements of future pensioners, primarily as a result of underperformance of the INVESTMENT PORTFOLIO underlying the pension.

palgrave

0

13.62

19.3

0

16.14

21.5

12.13

25

24.05

UNDERINSURANCE

(1) Insufficient INSURANCE to cover an INSURABLE RISK, leaving the INSURED exposed to financial loss. (2) Failure by the insured to meet COINSURANCE requirements specified by the INSURER. (1) See alsoOVERINSURANCE.

palgrave

0

23.09

17.7

0

15.85

22

12.81

24.5

24.01

UNDERINVESTMENT PROBLEM

A situation where a company in FINANCIAL DISTRESS is urged by CREDITORS to invest in projects with low RISKS and low RETURNS. Such INVESTMENTS are intended to protect the ASSET position of the firm for the benefit of creditors rather than maximize ENTERPRISE VALUE for the benefit of SHAREHOLDERS.

palgrave

0

38.15

14

0

12.25

14.7

10.65

18.75

17.96

UNDERLYING

The ASSET or market reference defining or underpinning a DERIVATIVE contract.

palgrave

0

18.01

13.5

0

16.34

12.8

12.79

7.5

15.31

UNDERPERFORMANCE OPTION

An OVER-THE-COUNTER COMPLEX OPTION that grants the buyer a PAYOFF based on the underperformance of a market reference or SPREAD against a predefined STRIKE PRICE. See alsoOUTPERFORMANCE OPTION, SPREAD OPTION.

palgrave

0

47.79

10.3

0

15.77

14.2

10.17

9

11.33

UNDERSTANDABILITY

A principle of ACCOUNTING indicating that finan- cial terms and information must be presented in a way that can be under- stood by an individual with some degree of business knowledge, that it should include essential information and should not include irrelevant or overly U detailed information.

palgrave

0

6.85

24

0

14.12

27.2

11.68

33.5

25.61

UNDERSUBSCRIPTION

A situation where the number of ORDERS for a NEW ISSUE of SECURITIES is lower than the available SUPPLY, suggesting the price of the security could decline at launch. Depending on the nature of the CAPITAL commitment, the UNDERWRITERS may take up a shortfall in orders. See also OVERSUBSCRIPTION.

palgrave

0

46.47

10.8

13

11.19

10.6

9.92

11.166667

13.05

UNDERWATER

(1) A market situation where an OPTION is so far OUT- OF-THE-MONEY that it is virtually worthless. (2) An INVESTMENT positionwith a MARKET VALUE that is below BOOK VALUE or carrying value, and which will crystallize a loss if sold.

palgrave

0

30.88

18.9

0

9.7

21.2

9.57

26

22

UNDERWRITER

(1) A FINANCIAL INSTITUTION involved in UNDERWRI- TING a NEW ISSUE of SECURITIES. (2) An INSURER or REINSURER that anal- yzes, prices, and accepts or rejects INSURABLE RISKS. (1) See also SYNDICATE.

palgrave

0

30.54

17

0

11.21

19.2

14.6

24

22.8

UNDERWRITER’S LIABILITY

The LIABILITY an UNDERWRITER faces in arranging and issuing SECURITIES for a company. If DUE DILIGENCE has not been performed (or has been performed with errors), or if financial disclosure contained in the PROSPECTUS is incorrect, INVESTORS holding securities that ultimately DEFAULT may be able to recover their losses from the underwriter.

palgrave

0

28.17

15.8

0

14.8

17.9

11

19.5

18.09

UNDERWRITING

(1) In the SECURITIES industry, the process of issuing NOTES, BONDS, CONVERTIBLE BONDS, COMMON STOCK, or PREFERRED STOCK in the PRIMARY MARKET on behalf of an ISSUER. (2) In the banking and INSURANCE industries, the process of thoroughly evaluating a RISK expos- ure and determining whether anticipated profitability is commensurate with EXPECTED LOSS. In banking this is often done through CREDIT analysis; in insurance it is accomplished through ACTUARIAL PRICING and analysis. (1) See also ALL-OR-NONE , BEST EFFORTS , BOUGHT DEAL.

palgrave

0

13.96

21.3

0

14.57

25.2

12.33

30

24.5

UNDERWRITING AGREEMENT

See SYNDICATE AGREEMENT.

palgrave

0

34.59

9.2

0

15.03

14.6

14.31

1.5

14.53

UNDERWRITING INCOME

In INSURANCE, the net amount earned from core insurance UNDERWRITING activities, typically computed as:UI = Pr – (IL + LAE + UE + Div)where Pr is PREMIUM, IL is INCURRED LOSSES, LAE is LOSS ADJUSTMENT EXPENSES, UE is underwriting EXPENSE, and Div is policyholder DIVIDENDS.

palgrave

0

4.48

22.8

0

14

25.4

14.14

34.5

26.16

UNDERWRITING RISK

(1) The RISK that a SYNDICATE of BANKS or SECURITIES FIRMS UNDERWRITING a NEW ISSUE on a BOUGHT DEAL basis will be unable to place securities with INVESTORS, indicating that they will be required to fund any shortfall from their own resources. (2) The risk that the PREMIUM an INSURER charges INSUREDS will prove insufficient to cover future losses, and that losses and LOSS ADJUSTMENT EXPENSES will not be properly covered by RESERVES.

palgrave

0

-2.63

31.8

0

12.21

38.6

13.53

47.5

34.68

UNDERWRITING SPREAD

In a NEW ISSUE, the difference between the amount paid by the SYNDICATE to the ISSUER and the price at which SECURITIES are offered to INVESTORS. The spread varies by issuer, class of issue, market conditions, and marketplace, and can range from 4% to 7% for COMMON STOCK to less than 1% for NOTES and BONDS. Also known as GROSS SPREAD, SPREAD. See also SELLING CONCESSION.

palgrave

0

71.65

7.4

10.1

8.35

8.8

9

8.75

9.63

UNDISCLOSED FACTORING

A form of FACTORING where the under- lying does not want the presence of a factor to be revealed. Apart from thisconfidentiality, the roles of seller and factor remain the same as in a conven- tional factoring arrangement.

palgrave

0

52.19

10.7

0

10.21

11

8.73

11.5

10.76

UNDISTRIBUTABLE RESERVES

In the United Kingdom, that portion of CAPITAL that cannot be distributed, including SHARE CAPITAL, the SHARE PREMIUM, and certain other RESERVES and unrealized profit accounts. See also RESTRICTED SURPLUS.

palgrave

0

30.87

12.7

0

15.19

13.9

9.64

11

12.67

UNDUE INFLUENCE

Any form of influence that can be interpreted as coer- cion in the preparation and execution of a CONTRACT, and which may render the contract null and void by a court.

palgrave

0

48.47

14.2

0

8.37

14.9

10.27

19.5

17.56

UNEARNED PREMIUM RESERVE

A RESERVE that contains a portion of the advance PREMIUM paid by an INSURED to an INSURER (or a CEDING INSURER to REINSURER) to cover the amount of INSURANCE (or REINSURANCE) that is still in force. Since premiums are normally charged at the inception of a policy but potential LIABILITY exists until the policy terminates, the reserve reflects the amount needed to cover EXPECTED LOSS prior to expiry. The amount of the reserve associated with a specific policy declines as contract expiry draws closer.

palgrave

0

34.6

15.4

17.1

11.55

16.2

11.04

20

18.34

UNEMPLOYMENT

Lack of employment for able workers, and a key measure of the state of an ECONOMY in the BUSINESS CYCLE. During recovery and growth phases unemployment is low as demand for productive labor increases; during slowdown and RECESSION phases unemployment rises as demand for labor declines in line with reduced economic output.

palgrave

0

36.63

14.6

0

12.89

16.2

11

17.5

16.55

UNEXPECTED CREDIT LOSS

The difference between EXPECTED CREDIT LOSS and WORST-CASE CREDIT LOSS; alternatively, the difference between the MEAN of the credit loss distribution function and a point represented by multiple STANDARD DEVIATIONS from the mean.

palgrave

0

21.06

18.5

0

17.42

23.3

9.58

24.5

20.47

UNFAIR PREFERENCE

The transfer of ASSETS or the payment of sums to a CREDITOR by a party that is about to declare BANKRUPTCY. Such a transfer may be declared void by the courts and be subject to CLAWBACK.

palgrave

0

70.13

8

0

6.44

7.3

8.92

9

9.42

UNFUNDED PENSION PLAN

A PENSION SYSTEM in which current employ- ees pay for the benefits of existing pensioners (e.g., pay as you go). See alsoFUNDED PENSION PLAN, UNDERFUNDED PENSION PLAN.

palgrave

0

49.31

9.7

0

10.49

9.9

11.32

8.25

12.81

UNIFORM PRICE AUCTION

A type of AUCTION MARKET in which buyers submit BIDS reflecting the price they will pay for a given quantity of an item. The orders are then allocated from highest to lowest, until the total SUPPLY of items is exhausted. Thereafter, bidders pay a per unit price that is equal to the lowest winning bid, rather than the original bid submitted.A COLLATERAL agreement where only required to post SECURITY; this generally COUNTERPARTIES to a transaction has amaterially lower CREDIT RATING than the second party. See also BILATERAL COLLATERAL.

palgrave

0

40.69

13.1

13.8

11.89

13.8

11.01

14.5

14.71

UNINCORPORATED BUSINESS

Any form of business organization where the owner bears UNLIMITED LIABILITY for any DEBTS incurred.

palgrave

0

30.87

12.7

0

14.61

12.8

10.7

10.5

14

UNINSURABLE RISK

A RISK that cannot be covered by INSURANCE as it fails to meet the standard requirements set forth for an INSURABLE RISK, i.e., the risk can produce a loss that is not definable or fortuitous, or the risk is catastrophic and cannot be transferred through payment of an economically reasonable PREMIUM. Also known as PROHIBITED RISK.

palgrave

0

43.06

14.2

0

10.97

15.9

9.82

19

18.34

UNISSUED STOCK

COMMON STOCK that is authorized for issuance through a firm’s CORPORATE CHARTER, but has not yet been floated; unissued stock stands in contrast to TREASURY STOCK, which is issued but no longer outstanding.(3) See CLOSED-END FUND.

palgrave

0

51.86

15

0

13.41

22.1

12.88

21

17.73

UNLIMITED COMPANY

A form of corporate organization in which SHAREHOLDERS do not benefit from the tenet of LIMITED LIABILITY.

palgrave

0

28.84

13.5

0

12.82

12

10.98

14.5

20.92

UNLIMITED LIABILITY

A concept and structure where the personal ASSETS of INVESTORS, GENERAL PARTNERS, or sole proprietors are at RISK in the event of a business loss; the extent of financial LIABILITY is notbounded as it is in a LIMITED LIABILITY company. See also PIERCING THE CORPORATE VEIL.

palgrave

0

39.67

13.4

0

11.15

13.4

10.61

16.5

15.29

UNLIQUIDATED DAMAGES

DAMAGES awarded to a plaintiff that can only be estimated ex-post by the courts. See also LIQUIDATED DAMAGES, STATUTORY DAMAGES.

palgrave

0

44.41

9.6

0

11.69

9.2

10.45

5.5

10

UNLISTED SECURITY

Any SECURITY that is not formally listed on an EXCHANGE, and which need not comply with exchange rules related to dis- closure. Unlisted securities are typically issued by small companies and are very ILLIQUID.

palgrave

0

45.76

11.1

0

11.95

11.6

10.98

12

15.04

UNMATCHED BOOK

A PORTFOLIO of ASSETS and LIABILITIES (such as the LOANS and DEPOSITS of a BANK, or the REPURCHASE AGREEMENTS and REVERSE REPURCHASE AGREEMENTS of a SECURITIES FIRM), with unequal MATURITIES or DURATIONS. An unmatched book increases an institution’s exposure to MARKET RISK and/or LIQUIDITY RISK, but provides for the possibility of a greater RETURN on CAPITAL. See also GAP, GAPPING, MATCHED BOOK, MISMATCH, OPEN BOOK.

palgrave

0

40.99

12.9

15

13.23

15.1

11.03

15.166667

15.45

UNQUALIFIED OPINION

An AUDIT OPINION by an EXTERNAL AUDITOR indicating that a company’s FINANCIAL STATEMENTS present a fair and accurate view of its financial position and conform to accepted ACCOUNTING PRINCIPLES. Also known as CLEAN OPINION. See also ADVERSE OPINION, QUALIFIED OPINION.

palgrave

0

32.6

12

14.6

14.49

12.2

10.61

10.666667

16.32

UNREALIZED GAIN

Gains on an ASSET (resulting from a positive change in valuation) that have not yet been realized or “locked in” for ACCOUNTING purposes. An unrealized profit can only be realized through disposal or estab- lishment of a HEDGE. Also known as PAPER PROFIT. See also REALIZED GAIN,UNREALIZED LOSS.

palgrave

0

50.84

9.2

12.6

10.83

8.9

9.17

7.75

11.47

UNREALIZED LOSS

Losses on an ASSET (resulting from a negative change in valuation) that have not yet been realized or “locked in” for ACCOUNTING purposes. An unrealized loss can only be realized through disposal. Also known as PAPER LOSS. See also REALIZED LOSS, UNREALIZED GAIN.

palgrave

0

52.05

8.7

12.6

10.42

8.2

8.21

7.125

11.76

UNREGISTERED STOCK

STOCK that is not registered with the relevant SECURITIES REGULATOR and which cannot therefore be TRADED on a public basis.

palgrave

0

34.26

13.5

0

12.59

13.1

10.16

14

16

UNSECURED

A financing or LIABILITY that is not backed by any type of support, e.g., no COLLATERAL or GUARANTEE. See also SECURED.

palgrave

0

52.36

8.6

0

6.93

6

11.68

6.25

11.82

UNSECURED CREDITOR

A CREDITOR that has lent MONEY to an indi- vidual or company without taking any COLLATERAL as SECURITY. See alsoSECURED CREDITOR, UNSECURED DEBT.

palgrave

0

25.96

12.5

0

11.52

9.5

10.39

8.75

15.03

UNSECURED DEBT

A BOND or LOAN without any COLLATERAL back- ing; the sole source of repayment for INVESTORS or LENDERS comes from the DEBTOR’S financial resources. Unsecured debt is most common among BORROWERS/ISSUERS with strong CREDIT RATINGS. See also SECURED DEBT.

palgrave

0

66.74

7.2

10.5

12.75

10.9

11.97

7.166667

10.33

UNWIND

The process of settling two or more DERIVATIVE transactions between two COUNTERPARTIES in order to reduce CREDIT RISK exposures and crystallize any MARK-TO-MARKET gain or loss. The unwinding process terminates all affected CONTRACTS and is thus a more efficient method than entering into BACK-TO-BACK SWAPS.

palgrave

0

40.18

13.2

0

16.13

17.3

11.42

17.25

17.89

UNWIND PRICE

See TEAR-UP PRICE.

palgrave

0

119.19

-2.7

0

1.52

5.2

0.15

0.5

1.2

UP AND IN OPTION

A COMPLEX OPTION that creates a standard EUROPEAN OPTION if the price of the UNDERLYING market reference rises above a predefined BARRIER. See also BARRIER OPTION, DOWN AND IN OPTION, DOWN AND OUT OPTION, KNOCK-IN OPTION, REVERSE KNOCK-IN OPTION, UP AND OUT OPTION.

palgrave

0

41.19

12.9

0

11.6

13.8

8.74

13.75

13.25

UP AND OUT OPTION

A COMPLEX OPTION that extinguishes a stand- ard EUROPEAN OPTION if the price of the UNDERLYING market reference rises above a predefined BARRIER. If the barrier is not breached the European option remains in effect. See also BARRIER OPTION, DOWN AND IN OPTION, DOWN AND OUT OPTION, KNOCK-OUT OPTION, REVERSE KNOCK-OUT OPTION, UP AND IN OPTION.

palgrave

0

44.03

11.8

13

11.43

12.1

8.51

12.333333

11.77

UPFRONT COLLATERAL

A process where an institution takes initial COLLATERAL from its COUNTERPARTY in an amount sufficient to cover expected POTENTIAL EXPOSURE for the entire life of the transaction. Under this arrangement no periodic evaluations or collateral calls are required. See also PERIODIC COLLATERAL.

palgrave

0

23.43

13.5

15.5

15.94

13.4

10.72

11.666667

16.08

UPSTAIRS MARKET

TRADES executed through a BROKER/DEALER, or between two broker/dealers, that do not flow through an EXCHANGE. Upstairs market transactions cannot occur at prices that are prejudicial to cus- tomers. See also CROSSED TRADE.

palgrave

0

60.31

7.6

10.5

13.55

11.2

9.92

6.166667

8.04

UPSTREAM

(1) The process of channeling funds from a SUBSIDIARY to a PARENT or HOLDING COMPANY. This may occur when the parent or holding company is restricted in some way from raising funds directly. (2) The segment of the energy industry that is focused on exploration, extraction, and produc- tion. See also DOWNSTREAM.

palgrave

0

53.92

10

13

10.32

10.9

10.57

11.666667

12.3

UPTICK

See PLUS TICK.

palgrave

0

119.19

-2.7

0

-4.29

-1.2

9.05

0.5

1.2

UPTICK RULE

A rule imposed by the SECURITIES AND EXCHANGE COMMISSION that only permits a SHORT SALE in a SECURITY or INDEX ARBITRAGE program to be initiated on a PLUS TICK or ZERO PLUS TICK. The rule is intended to halt a self-fulfilling downward spiral, where each downtick leads to further short selling.

palgrave

0

45.59

13.2

0

10.33

13.8

10.47

16.25

15.69

USANCE

The time period during which a BILL OF EXCHANGE must be paid.

palgrave

0

84.68

4.4

0

5.5

4.2

5.55

6

8.13

USURY

The practice of charging an excessive INTEREST RATE on any class of DEBT or LIABILITY; in many national systems usury is prohibited by law through the establishment of maximum interest rate ceilings.

palgrave

0

22.08

18.1

0

13.41

19.3

11.64

24

21.55

UTILIZATION RATE

The portion of a REVOLVING CREDIT FACILITY that is drawn down by the BORROWER, and which must be repaid according to scheduled terms.

palgrave

0

48.13

12.3

0

10.51

12.8

11.64

15.5

16.16

VALORIZATION

A process used by a government authority to artifi- cially support or increase the price of an ASSET or COMMODITY, often by constraining SUPPLY.

palgrave

0

30.2

15

0

11.55

14.3

11.41

17

16.27

VALUATION

See CORPORATE .

palgrave

0

-6.7

14.7

0

4.2

10.2

11.63

1.5

20.8

VALUE-ADDED TAX (VAT)

An indirect TAX applied in certain national sys- tems that is payable by producers and consumers of goods and services. A tax is levied on each incremental stage of the production process that adds value to the good or service being produced. See also AD VALOREM.VAR1−α(rp ) = − min{z | ( P(rp ≤ z) > α)}where rp is the return on a portfolio of assets, P is the probability, 1 – α is the confidence level (e.g., α set to 1% or 5%), z is the relevant Z-SCORE. See alsoBACKTESTING, EXTREME VALUE THEORY, MAXIMUM LOSS, PROFIT AND LOSS EXPLAIN.

palgrave

0

55.78

11.4

13.4

8.07

12.3

11.13

15.75

14.57

VALUE CHAIN

A sequence of linked activities supporting the production of a good, where each activity adds a particular value to the end product. Common value chain activities include logistics, production, marketing, and distribution, along with supporting functions such as research and develop- ment, human resources, and technology.

palgrave

0

22.75

15.8

0

16.83

18.5

11.99

18

17.9

VALUE DATE

The date on which funds become GOOD MONEY, or a SECURITIES or FOREIGN EXCHANGE transaction is settled. Also known asSETTLEMENT DATE.

palgrave

0

52.36

8.6

0

11.34

8.9

8.67

5.75

9.91

VALUED CONTRACT

An INSURANCE POLICY that provides the INSURED with a stated payout amount, agreed on an ex-ante basis, in the event of a loss. Valued contracts are generally associated with life insurance policies, which specify a certain sum payable to the BENEFICIARY upon the death of the insured. See also INDEMNITY CONTRACT.

palgrave

0

45.76

11.1

12.5

11.54

11.4

10.98

11.166667

12.29

VANILLA

A standard or conventional financial transaction, rather than one with esoteric or complex parameters, RISKS, or PAYOFF profiles.Since vanilla transactions are common, they tend to feature the greatest LIQUIDITY and the narrowest BID-OFFER SPREADS. Also known as PLAIN VANILLA.

palgrave

0

26.3

14.4

0

17.06

17.2

12.3

14.75

16.01

VAR

See VALUE-AT-RISK.

palgrave

0

77.91

2.9

0

10

19.6

11.63

0

0.8

VARIABLE ANNUITY

An ANNUITY where PREMIUMS received from the INVESTOR are used to purchase accumulation units with variable value deter- mined by the worth of the SECURITIES in the INSURER’s INVESTMENT PORTFOLIO. When the benefits are ultimately paid to the ANNUITANT, units are converted into a fixed number, crystallizing the payout.

palgrave

0

29.69

15.2

0

14.39

16.8

11.62

18.25

19.6

VARIABLE COST

An expense that changes in proportion to a company’s output, increasing as output increases and decreasing as output decreases (e.g., raw materials used in production). Variable cost is one of two elements, along with FIXED COST, which comprise TOTAL COSTS. It can also be computed as the sum of the MARGINAL COSTS.

palgrave

0

53.92

10

14.1

10.67

11.2

10.87

12.333333

15.38

VARIABLE LIFE ASSURANCE

In the United Kingdom, form of life ASSURANCE in which PREMIUMS are invested in UNIT TRUSTS and where the amount of coverage can be altered by the INSURED. See also VARIABLE LIFE INSURANCE.

palgrave

0

63.19

8.5

0

9.51

9.2

9.24

10.75

12.66

VARIABLE LIFE INSURANCE

In the United States, a form of whole life INSURANCE in which PREMIUMS are invested in a range of SECURITIES on a TAX-deferred basis. Since the policy features standard INVESTMENT RISKS it is treated as a form of security and sold with a PROSPECTUS. See also VARIABLE LIFE ASSURANCE.

palgrave

0

54.93

9.6

12.5

9.63

9.3

9.92

10.833333

13.05

VARIABLE LIMIT

A provision in a PROPERTY AND CASUALTY INSU- RANCE POLICY that automatically increases the size of the INSURED’s limit at each anniversary date, to coincide with increased value attributable to the underlying property being insured. The insured retains the sole right not to increase the limit on each specified date.CERTIFICATE OF DEPOSIT.

palgrave

0

19.71

17

0

14.68

17.8

11

19.5

19.63

VARIABLE RATE DEMAND NOTE

A NOTE issued by a BANK that pays a FLOATING RATE based on PRIME RATE or LIBOR, and which is redeemable on demand by the INVESTOR.

palgrave

0

78.93

8.7

0

5.98

10.6

10.39

13

10.4

VARIABLE RATE MORTGAGE

In the United Kingdom, an ADJUSTABLE RATE MORTGAGE.

palgrave

0

71.82

5.2

0

10.8

8.5

7.98

3

3.2

VARIABLE RATE NOTE (VRN)

A form of FLOATING RATE NOTE where both the reference INTEREST RATE (e.g., LIBOR, EURIBOR) and the MARGIN over the reference are adjusted at periodic intervals, generally every quarter. The resetting of the margin is a function of SUPPLY and DEMAND conditions, as well as the market perception of the ISSUER’s CREDITWORTHINESS.STOCK.

palgrave

0

28.17

15.8

0

13.23

17.1

11

19

18.86

VARIANCE

A measure of RISK, variability, or dispersion, reflecting the mag- nitude by which an outcome differs from the EXPECTED VALUE, or the degree to which an observation deviates from the MEAN of a distribution. Variance, which is the second MOMENT about the mean and equal to the STANDARD DEVIATION squared, can be computed as:⎣⎦where xi is an observation, μ is the mean, and N is the number of observations.

palgrave

0

36.46

16.7

0

10.57

18.8

10.38

22.75

19.6

VARIANCE/COVARIANCE MATRIX

A matrix of COVARIANCES between the variables in a vector, reflecting VARIANCES on the diagonal and covari- ances on the off-diagonal. The matrix is commonly used in PORTFOLIO ana- lysis and VALUE-AT-RISK computations. The general form of a two-variable matrix is given as:σ2⎣where x, y are variables, cov is the covariance between the variables and σ2 is the variance of each variable.greater than implied volatility, and losses are smaller when the reverse occurs). Variance swaps are often used in the EQUITY and FOREIGN EXCHANGE mar- kets. See also REALIZED VOLATILITY SWAP.(1) See also INITIAL MARGIN, CLEARING MARGIN.

palgrave

0

43.32

12

12.7

12.88

13.8

11.11

12.5

11.88

VAT

See VALUE-ADDED TAX.

palgrave

0

93.81

0.9

0

5.35

8.3

9.05

0.5

1.2

VEGA

The change in the value of an OPTION for a change in VOLATILITY, with all other variables held constant. The vegas of the CALL OPTION and PUT OPTION computed under the BLACK-SCHOLES MODEL (which are equiva- lent) are given by:N’(d ) =12pand S is the STOCK price, t is the time to MATURITY, σ is the STANDARD DEVIATION, and where the value of N’(d1) can be obtained from a standard table of PROBABILITY functions.The vegas of long and short puts and calls are shown as:Also known as KAPPA, LAMBDA. See also DELTA, GREEKS, THETA, RHO,GAMMA.

palgrave

0

48.17

14.3

11.2

9.24

16.5

10.73

17.833333

14.65

VEGA NEUTRAL

A PORTFOLIO of OPTIONS that is neutral with respect to its VEGA, meaning that it is HEDGED against moves in VOLATILITY. See alsoDELTA NEUTRAL, GAMMA NEUTRAL, THETA NEUTRAL.

palgrave

0

65.73

7.6

0

11.13

10

11.1

7

8.46

VELOCITY OF MONEY

The average number of times a given unit or amount of MONEY in a system changes hands (or is spent) over a defined time period. Velocity is used in various economic theories, such as the QUANTITY THEORY OF MONEY. Also known as VELOCITY OF CIRCULATION.

palgrave

0

47.79

10.3

13.6

8.05

7.7

9.64

10.833333

14

VERTICAL LAYERING

A practice where different REINSURERS assume the RISK of different loss layers under an EXCESS OF LOSS (XOL) REINSURANCE agreement. Each reinsurer becomes liable for its own layer of coverage between a specific ATTACHMENT level and individual POLICY CAP. Under this approach not every reinsurer is susceptible to losses and CLAIMS once the underlying DEDUCTIBLE is exceeded; the higher vertical layers may not be exposed unless the losses are large. See also EXCESS LAYER, HORIZONTAL LAYERING.

palgrave

0

35.27

13.1

14.9

13.98

14

10.81

13.75

14.97

VERTICAL MERGER

A MERGER between companies that represent differ- ent components or stages of the service or industrial process. A vertical merger may be arranged if a company wishes to control or influence the majority of the processes that are used in the production of goods and services, including raw material extraction, processing, production, warehousing, transporting, shipping, and retailing. See also CONGLOMERATE MERGER, HORIZONTAL MERGER.

palgrave

0

24.78

15

17.9

15.95

17

11.7

17.166667

19.83

VERTICAL SPREAD

See BEAR SPREAD, BULL SPREAD.

palgrave

0

117.16

-1.9

0

4.96

4.6

0.25

1.5

2

VESTED BENEFIT

A benefit, such as a PENSION or STOCK ownership inter- est, that is owed by a company to an employee, and which the employee is entitled to if he/she departs.

palgrave

0

49.49

13.8

0

7.09

13.8

9.86

21

17.33

VESTED INTEREST

A right of ownership in, and use of, an ASSET on an immediate basis, and which is not dependent on the outcome of a future event.

palgrave

0

62.01

11.1

0

5.35

10.4

9.78

16

15.02