Unbanked
DefinitionThe unbanked are adults who do not have their own bank accounts. Along with the underbanked, they may rely on alternative financial services for their financial needs, where these are available. Unbanked What is 'Unbanked' A slang term for people who do not use banks or banking institutions in any capacity. Unbanked persons generally pay for things...
Undercapitalization
Why Is Undercapitalization a Problem? And How You Can Fix It Undercapitalization is a condition in which a business does not have enough funds to meet its current operational needs. It results in negative cash flow and can lead to bankruptcy. In this article, we'll examine why undercapitalization is a problem, and how you can fix it. Despite the problems...
Unconsolidated Subsidiary
What is an unconsolidated subsidiary An unconsolidated subsidiary is a subsidiary in which the parent company does not include the subsidiary's financials in its consolidated financial statements. The term "unconsolidated" simply means that the subsidiary is not combined with the parent company for accounting purposes. There are a few different reasons why a parent company might choose to keep a...
Unsecured Loan
DefinitionIn finance, unsecured debt refers to any type of debt or general obligation that is not protected by a guarantor, or collateralized by a lien on specific assets of the borrower in the case of a bankruptcy or liquidation or failure to meet the terms for repayment. Unsecured Loan An unsecured loan is a type of loan that is...
Uncovered Option
An uncovered option is a type of option contract that is not hedged by an opposite position in the underlying security. This leaves the holder of the option open to unlimited losses if the market price of the underlying security moves against them. For this reason, uncovered options are also known as naked options. Despite the risks, trading uncovered options...
Underwater
What is 'Underwater' An option that would be worthless if it expired today. An underwater option may be either a call or put option. A call option is underwater when its strike price is higher than the market price of the underlying asset. A put option is underwater when its strike price is lower than the market...
Underpricing
When a company offers its stock to the public for the first time, it's called an initial public offering, or IPO. IPOs can be a great opportunity for investors, but only if the stock is priced correctly. When a company prices its IPO below its market value, it's called underpricing. In this article, we'll explore what underpricing is, why...
Bankruptcy
DefinitionBankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor. Bankruptcy is not the only legal status that an insolvent person may have, and the term bankruptcy is therefore not a synonym for insolvency. In some countries,...
Mandatorily Redeemable Shares
What are 'Mandatorily Redeemable Shares' Mandatorily redeemable shares are shares owned by an individual or entity which are required to be redeemed for cash or another such property at a stated time or following a specific event. Mandatorily reedemable shares are often issued by employers as a sort of compensation kicker to employees; however, the employer would require the employees...
Underlying Asset
What is an 'Underlying Asset' An underlying asset is the security or commodity underlying a Derivative. The most common type of derivative is a futures contract, and the underlying asset for futures contracts can be anything from agricultural products to financial instruments. For example, a corn futures contract would have corn as its underlying asset, while a stock index futures...