Letter U Vocabulary

Question 1

An option that is sold without the seller holding the underlying asset or another offsetting position.

Answer 1

Uncovered Option

Question 2

The financial instrument upon which a derivative’s price is based.

Answer 2

Underlying Asset

Question 3

A margin account that does not meet the minimum equity requirement set by the brokerage firm.

Answer 3

Undermargined Account

Question 4

An entity, usually a financial institution, that assumes the risk of a business venture or guarantees the issuance and sale of securities.

Answer 4

Underwriter

Question 5

A contract between an underwriter and an issuer detailing the terms of a security’s issuance.

Answer 5

Underwriting Agreement

Question 6

Exposure to an investment risk without taking measures to offset or reduce the potential impact.

Answer 6

Unhedged

Question 7

A model state law designed to guide each state’s own securities laws and regulations.

Answer 7

Uniform Securities Act

Question 8

A contract where only one party makes a promise in exchange for the other’s performance.

Answer 8

Unilateral Contract

Question 9

An investment company that offers a fixed portfolio of stocks and bonds as redeemable units to investors for a specific period.

Answer 9

Unit Investment Trust (UIT)

Question 10

An assertion by an auditor indicating that financial statements are fairly and appropriately presented, without any identified exceptions.

Answer 10

Unqualified Opinion

Question 11

A security that has been in the market for less than three years.

Answer 11

Unseasoned Issue

Question 12

Risk specific to a single asset or a small group of assets, also known as “idiosyncratic risk” or “specific risk.”

Answer 12

Unsystematic Risk

Question 13

A transaction executed at a price higher than the preceding transaction.

Answer 13

Up Tick

Question 14

The volume of shares traded during a day when the price increased.

Answer 14

Up Volume

Question 15

A type of barrier option that activates when the price of the underlying asset reaches a set barrier.

Answer 15

Up-and- In Option

Question 16

A type of barrier option that becomes void if the price of the underlying asset reaches a set barrier.

Answer 16

Up-and-Out Option

Question 17

A broker who discloses their fees and the wholesale loan rates they receive from lenders.

Answer 17

Upfront Mortgage Broker

Question 18

A measure of the potential positive or negative movement of an asset or market.

Answer 18

Upside/Downside Ratio

Question 19

A market condition characterized by higher highs and higher lows in asset prices over time.

Answer 19

Uptrend