Glossary of Terms

Abbreviation for Undertaking for Collective Investments in Transferable Securities.

Pensions and tax. Upper Earnings Limit.

The Generally Accepted Accounting Principles applicable in the United Kingdom.

UK Listing Authority.

Beyond the scope or in excess of legal power or authority of a person, official or body.

Pensions. See Industry wide scheme.

United Nations Rules for EDI for Administration, Commerce and Transportation. UN/EDIFACT comprises a set of internationally agreed-upon standards, directories, and guidelines for the electronic interchange of structured data related to trade.

VAT which cannot be attributed directly either to exempt supplies nor to taxable supplies.

An uncommitted borrowing facility is one in which the potential provider of funds - commonly a bank - is not legally obliged to provide the funds.

1. In relation to a cover ratio, the situation where the cover ratio falls below 1.0.

2. In relation to a market position, the situation where the position taker is exposed to the risk of adverse changes in market rates or prices.

3. In relation to an operational exposure, an uncovered exposure is one which has not been hedged.

A speculative activity involving the switching of funds, for example, from a lower interest rate currency into a higher interest rate currency.

(It differs from Covered interest arbitrage, because no forward foreign exchange contact is transacted to cover the related foreign exchange risk.)

1. See Underlying asset.

2. A risk exposure being hedged, often by the use of a derivative instrument.

In relation to options, the underlying asset, or the underlying, is the asset which the option holder has the right to require the option writer deal in (at the strike price specified in the option).

In relation to derivative instruments more generally, the underlying asset is the asset from which the cashflows, price and value of the derivative instrument are derived.

Options. The current market price of the (underlying) asset which the option holder has the right to require the option writer to deal in (at the strike price specified in the option).

A body corporate or partnership, or unincorporated association, carrying on a trade with or without a view to profit.

(UCITS). Generic term for any open-ended collective investment scheme involving investments in assets that are available under the form of transferable securities, for example, FCPs, OEICSs, SICAVs and unit trusts.

1. The process of committing to purchase any securities remaining unsold after an issue. The underwriter agrees to purchase any unsold securities.

2. More generally, providing guarantees or insurance, in return for a fee or for other consideration.

Pensions. A Defined Benefit pension scheme where assets are not accumulated in advance of the benefits commencing to be paid.

Most UK public sector DB pension schemes are unfunded. Corporate DB schemes in other jurisdictions may also be unfunded, for example in Germany.

See Gearing.

The beta value for a company which can be observed incorporates financial and business risk. The ungeared beta is calculated from the observed beta; to reflect the beta value which would be observed if the company were all equity financed. It is therefore indicative of the business risk of the company. The ungeared beta is also called the asset beta.

The recalculated cash flow from a firm or a project, assuming that it was all-equity financed. (Regardless of the actual or proposed capital structure.)

A uniform set of laws governing commercial transactions enacted separately and sometimes differently by each state.

An unincorporated business is one which is not structured as a company. Examples include partnerships and sole traders.

In relation to risk, an uninsurable risk is one for which insurance cannot normally be bought in the market (because the providers of insurance are unwilling to offer contracts of insurance against such risks).

The same as Ungeared.

Accounting. From the group’s perspective, profit may be unrealised as the goods have not yet been sold external to the group, even if they have been sold from one group company to another.

An unrewarded risk is one which is not associated with any benefit for the party accepting the risk. So it is never rational - in terms of profit maximisation - to accept an unrewarded risk.

Unsecured debt has no additional backing beyond the general credit of the issuer.

In the Capital Asset Pricing Model, same as Specific risk.

A procedure followed in certain clearing and settlement systems in which transfers of securities or funds are settled on a net basis, at the end of the processing cycle, with all transfers provisional until all participants have discharged their settlement obligations. If a participant fails to settle, some or all of the provisional transfers involving that participant are deleted from the system and the settlement obligations from the remaining transfers are then recalculated. Such a procedure has the effect of transferring liquidity pressures and possible losses from the failure to settle to other participants, and may, in an extreme case, result in significant and unpredictable systemic risks.

(USCP). US domestic commercial paper is issued, traded and quoted on a discount basis.
The day count convention is Actual days per 360 day conventional year.

The Generally Accepted Accounting Principles applicable in the United States.

The rate of interest at which a commercial bank offers to lend money in the US domestic market to its most credit-worthy customers.
The approximate average of prime rates quoted by the major US banks on a given day.

Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act, 2001. This law has formed the basis of anti-terrorism regulations and has strengthened the anti-money laundering rules in the USA.

See Tenor.

Abbreviation for US domestic Commercial Paper.

Accounting. The period over which the present owner of an asset will derive economic benefits from its use.

Accounting. The length of time an asset is in use. The asset should be depreciated over its useful life.

See Utility.

1. An economic measure of satisfaction gained from consumption of goods or services, measured in 'utils'.

2. A firm providing necessity goods and services, such as water supplies.