Archives: Terms

Definition of Unearned Income Unearned income represents any form of income that individuals receive from non-labor sources. This type of income isn’t directly linked to work or employment but rather is derived from investments, government benefits, or other sources. Typical examples of unearned income include dividends from investments, interest earned […]

Definition of Underwriting Underwriting is the process by which financial institutions, such as banks or insurance companies, assess the eligibility, risks, and terms of insurance policies, loans, and securities to determine their viability and pricing. In essence, underwriting involves evaluating the potential risks involved in covering a client or enterprise […]

Definition of Underlying Rate of Inflation The underlying rate of inflation, also known as core inflation, measures the long-term trend in the price level of goods and services excluding the most volatile items such as food and energy prices. This concept aims to provide a clearer view of the inflation […]

Definition of Under-Valued Currency An under-valued currency refers to a situation where the value of a country’s currency is lower than its true intrinsic value as determined by factors such as purchasing power parity (PPP), the balance of payments, and other economic indicators. This can happen either intentionally or unintentionally […]

Definition of Under-Subscription Under-subscription occurs when an initial public offering (IPO) or other securities offering does not attract enough interest from investors to purchase all the available shares or units. This situation indicates that the demand for the offered securities is lower than the amount available for sale. While under-subscription […]

Definition of an Under-Funded Pension Scheme An under-funded pension scheme refers to a retirement plan that does not have sufficient assets to meet its future payment obligations to retirees and beneficiaries. This situation occurs when the fund’s liabilities, which include all the promised future payments, exceed the current value of […]

Definition of Under-Developed Countries Under-developed countries, often referred to as developing countries or less developed countries (LDCs), are nations with low levels of industrialization, income, education, and healthcare. These countries typically have a large proportion of their population living in poverty, and they struggle with economic instability and slower growth […]

Definition of Under-Capitalized Under-capitalized refers to a situation where a business does not have sufficient capital to sustain its operations, grow, or meet its financial obligations. This scenario can occur when a company is unable to secure the necessary funding from investors, fails to generate enough revenue, or mismanages its […]

Definition of Uncovered Interest Parity Uncovered Interest Parity (UIP) refers to a financial theory that suggests the difference in interest rates between two countries is equal to the expected change in exchange rates between the countries’ currencies. This principle implies that investors will be indifferent to interest rates in different […]

Definition of Unconditional Grant An unconditional grant is a financial transfer from a higher level of government to a lower level, such as from the federal government to state or local governments, without any specific conditions attached on how the money should be spent. This type of grant provides flexibility […]