Category: U

An option that can be paid off if the reference asset underperforms against a strike price. Refer to outperformance spread and spread option.

Trades done between brokers that do not enter the exchange. The prices must be fair. Refer to crossed trade.

When an option is worthless. A market position that will result in loss if sold.

A rule allowing short sale on plus tick or zero plus tick securities.

Issuing securities on the primary market for an issuer. Or the act of predicting risk to ensure the possible gains are worth the risk. Refer to allornone underwriting, best efforts underwriting, and

The net amount earned from underwriting activities.

The risk incurred if securities dont sell. Any shortfall must be covered by the underwriter. Or the risk that loss will be greater than insurance can cover.

The difference between the price paid and the price offered by investors. Refer to selling concession.

A reserve held out of premium. This is the amount needed to cover losses before maturation.

Risk not covered by insurance that leads to loss. AKA prohibited risk.

Stock that is available to be sold through corporate charter but isn’t.

A fund where investors place capital for earning assets. They recieve the percentage they put in it in returns. It is managed by a third party. Refer to mutual fund.

Latin for in utmost good faith. It implies that the insured will disclose all relevant information to the insurer. The insured must also fulfill all obligations of the contract

When personal assets are used to absorb business failure. Refer to piercing the corporate veil.

the sum that the insurer or its representatives are legally required to pay through legal ruling or settlement. This sum can included medical and investigative costs.

A portfolio with different maturity rates. It increases the risk exposure but also increases profit possible. Refer to gap, gapping, matched book, open book, and mismatch.

It means outside ones jurisdiction. It is any financial action that is not covered legally under a companies laws. A third party can sue if this is mismanaged.

An auditor who is not part of the company who verifies the honesty of the financial records given.

Additional insurance to cover specific liabilities or perils. It works with current insurance to fill gaps.

An option that creates an european option if the price goes beyond a barrier. Refer to barrier, down and in, down and out, reverse knockin, knockin, and up and out options.