Business / Finance Glossary

Underwriting: A firm, usually an investment bank, that buys an issue of securities from a company and resells it to investors. In general, A party that guarantees the proceeds to the firm from a security . . . View Full Definition

Underwriting Agreement: Acting as the underwriter in the issue of new securities for a firm.

Underwriting Fee: The contract between a corporation issuing new publicly offered securities and the managing underwriter as agent for the underwriting group. Compare to agreement among underwriters.

Underwriting Income: The portion of the gross underwriting spread that compensates the securities firms that underwrite a public offering for their services.

Underwriting Spread: For an insurance company, the difference between the premiums earned and the costs of settling claims.

Underwriting Syndicate: The income that is generated by the underwriting syndicate and the selling group, which is essentially the difference between the amount paid to the issuer of securities in a primary distrib . . . View Full Definition

Underwritten Offering: A group of investment banks that work together to sell new security offerings to investors. The underwriting syndicate is led by the lead underwriter. See also: Lead underwriter.

Undigested Securities: A purchase and sale.

Undiversifiable Risk: Newly issued securities that are not purchased because of lack of demand during the initial public offering.

Unearned Income (Revenue): Related: Systematic risk

Unearned Interest: Income received in advance of the time at which it is earned, such as prepaid rent.

Unemployment Rate: Interest that has been received on a loan, but that cannot be treated as a part of earnings yet, because the principal of the loan has not been outstanding long enough.

Unencumbered: The percentage of the people classified as unemployed as compared to the total labor force.

Unfunded Debt: Property that is not subject to any claims by creditors. For example, securities bought with cash instead of on margin and homes with mortgages paid off.

Unfunded Pension Plan: Debt maturing within one year (short-term debt). See: Funded debt.

Uniform Commercial Code (UCC): Provides for the employer to pay out amounts to retirees or beneficiaries as and when they are needed. There is no money put aside on a regular basis. Instead, it is taken out of current income.

Uniform Gifts To Minors Act (UGMA): Collection of laws dealing with commercial business.

Uniform Practice Code: Legislation that provides a tax-effective manner of transferring property to minors without the complications of trusts or guardianship restrictions.

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