Financial Dictionary

This dictionary contains:
24549
financial terms

Underinvestment problem




Underinvestment problem

The mirror image of the asset substitution problem, in that stockholders refuse to invest in low-risk assets to avoid shifting wealth from themselves to debt holders.

RELATED TERMS
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Asset
Is the taxable basis of a property, imposed by the municipality. Often it is at a fraction of the market value.

Invest
To spend money in order to produce income or profits.

Wealth
The stock of money or goods that a person or country possesses.

Debt
Money borrowed.



SIMILAR TERMS
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Under the belt
Long position in a stock.

Underbanked
When an originating investment banker cannot find enough firms to underwrite a new issue.

Underbooked
Describes limited interest by prospective buyers in a new issue of a security during the preoffering registration period.

Undercapitalized
A company that does net have sufficient share capital to support its volume of trading.

UNDERCOVERWEAR Limited
UNDERCOVERWEAR Limited is a large Australian company in the field of consumer durables and apparel. Their Australian Stock Exchange (ASX) code is UCW.

Underfunded pension plan
A pension plan that has a negative surplus (i.e., liabilities exceed assets).

Underground economy
All employment and transactions on which tax is not paid, black economy.

Underlying
1) In derivatives, the security that must be delivered when a derivative contract, such as a put or call option, is exercised. 2) In equities, the common stock that must be delivered when a warrant is exercised, or when a convertible bond or convertible preferred share is converted to common stock.

Underlying asset
The security or property or loan agreement that an option gives the option holder the right to buy or to sell.

Underlying debt
Municipal bonds issued by government entities but under the control of larger government entities and for which the larger entity shares the credit responsibility.

Underlying futures contract
A futures contract that supports an option on that future, which is executed if the option is exercised .

Underlying instrument
The instrument, such as shares and commodities on which a futures or options contract is based.

Underlying security
For options, the security that is subject to purchase or sold upon exercise of an option contract.

Undermargined account
A margin account that no longer meets minimum maintenance requirements, requiring a margin call on the investor.

Underpayment penalty
A tax penalty enacted on an individual for not paying enough of his or her total estimated tax and withholding.

Underperform
An analyst recommendation that means a stock is expected to do slightly worse than the market return.

Underpricing
Issuing securities at less than their market value.

Undersell or undercut
To sell goods more cheaply than competitors.

Undervalued
A company whose stock market value is less than that of its assets.

Undervalued security
A security selling below its market value or liquidation value.

Underweight
An situation where a portfolio does not hold a sufficient amount of securities to satisfy the accepted benchmark of the portfolio's asset allocation strategy.

Underwithholding
When a taxpayer has withheld too little tax from salary and will therefore owe tax when filing a return.

Underwrite
To guarantee to buy or find buyers for a security issue; to take on the risk of paying for losses in accordance with the conditions of an insurance contract.

Underwriter
1) A company that brings a new issue to the market will have to fix the offer price in advance. 2) An agent for a syndicate at Lloyd's who literally writes his name at the foot of a policy to signify acceptance of all or an indicated part of that risk.

Underwriting
A bank or other financial institution's guarantee to a company that it will buy a certain number of shares in a company's new issue or rights issue, should the issue not be fully subscribed by other investors.

Underwriting agreement
The contract between a corporation issuing new publicly offered securities and the managing underwriter as agent for the underwriting group.

Underwriting Commission
The fee investment bankers charge for underwriting a security issue.

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

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

Underwriting spread
The spread between the amount underwriters pay an issuing company for its securities and the amount the underwriters receive from selling the securities in the public offering.

Underwriting syndicate
A group of investment banks that work together to sell new security offerings to investors.

Underwritten offering
A purchase and sale.



PREVIOUS AND NEXT TERMS
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Underbanked
When an originating investment banker cannot find enough firms to underwrite a new issue.

Underbooked
Describes limited interest by prospective buyers in a new issue of a security during the preoffering registration period.

Undercapitalized
A company that does net have sufficient share capital to support its volume of trading.

Underfunded pension plan
A pension plan that has a negative surplus (i.e., liabilities exceed assets).

Underground economy
All employment and transactions on which tax is not paid, black economy.

Underinvestment problem

Underlying
1) In derivatives, the security that must be delivered when a derivative contract, such as a put or call option, is exercised. 2) In equities, the common stock that must be delivered when a warrant is exercised, or when a convertible bond or convertible preferred share is converted to common stock.

Underlying asset
The security or property or loan agreement that an option gives the option holder the right to buy or to sell.

Underlying debt
Municipal bonds issued by government entities but under the control of larger government entities and for which the larger entity shares the credit responsibility.

Underlying futures contract
A futures contract that supports an option on that future, which is executed if the option is exercised .

Underlying instrument
The instrument, such as shares and commodities on which a futures or options contract is based.

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This dictionary contains 24549 terms.







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