U

• Unicorn

  A private startup company valued at over $1 billion. It is described to be a rare and highly valued status of such companies.

• Undercapitalization

  When a company does not have sufficient capital to conduct normal business operations and pay creditors. This can occur when the company is not generating enough cash flow or is unable to access forms of financing such as debt or equity.

• Underlying asset

  The financial assets upon which a derivative’s price is based. Options are an example of a derivative.

• Underwriting

  The process through which an individual or institution takes on financial risk for a fee. This risk most typically involves loans, insurance, or investments. The term underwriter originated from the practice of having each risk-taker write their name under the total amount of risk they were willing to accept for a specified premium.

• Unit cost averaging

  An investment strategy that involves regularly investing a fixed amount of money into an investment, buying more shares or units when prices are low and fewer shares or units when prices are high.

• Unlisted Security

  A security that is not traded on a public exchange because it does not meet listing requirements, often used in the context of private equity or debt investments.

• Unrealized gain

  An increase in the value of an investment that has not been sold or realized. It represents a paper gain that has not yet been converted into cash. An unrealized gain becomes realized once the position is sold for a profit.

• Unsecured creditor

  An individual or institution that lends money without obtaining specified assets as collateral. This poses a higher risk to the creditor because it will have nothing to fall back on should the borrower default on the loan.

• Unsecured debt

  Refers to loans that are not backed by collateral. If the borrower defaults on the loan, the lender may not be able to recover their investment because the borrower is not required to pledge any specific assets as security for the loan.

• Upside

  The potential increase in value, measured in monetary or percentage terms, of an investment. Often used to describe the positive potential of a high-risk investment. Analysts commonly use either technical analysis or fundamental analysis techniques to predict the future price of an investment.