Glossary

Probability of an event regardless of past or future occurrences of other events. See also: Conditional probability

LEVEL II Uncovered Interest Rate Parity (UIRP) states that the difference between two countries’ interest rates should be equal to the expected change in the exchange rate between the two currencies. In other words, UIRP states that an investor should receive the same return, after adjusting for expected exchange rate changes, regardless of whether they invest in a low-interest rate ...

A person who has a job but has the qualifications to work a significantly higher-paying job.

Underfitting occurs when the machine fails to identify actual patterns and relationships, treating true parameters as noise. This means the model is not complex enough to describe the data.  Compare: Overfitting

A form of public offering where the underwriters (investment banks) purchases the entire bond issue.   The underwriters establishes the pricing of the issue, and are responsible for selling the bonds to dealers, who in turn sell them to investors. For smaller bond issues, one single underwriter may have the capacity to purchase the entire bond issue, and take on ...

A liability account for money that has been collected for goods or services that have not been delivered.

Unemployment Rate = Number of Unemployed / Size of Labour Force The labour force of an economy consists of those who are employed, including the underemployed, and those who are actively searching for a job.  Compare: Participation Ratio

A depreciation method based on usage, rather than time. The depreciation expense is proportional to the units produced during the period. In periods where the usage is high, the depreciation expense is also proportionally high. Units-of-Production Depreciation = (Output Units/Total Capacity in Units) x (Cost – Residual Value)

Bonds which only gives the lender a general claim on the issuer’s assets and cash flow. No collaterals specified. Can have different seniorities. (e.g. Senior unsecured, Junior unsecured) Compare: Secured bonds

A type of Depository Receipt in which the foreign firm has no involvement in the issuance.  The depository buys the shares from the foreign market. The investor does not have any voting rights, which is retained by the depository bank. Compare: Sponsored Depository Receipt

Data that do not follow any conventionally organised forms (e.g. video, social media posts). Such data are particularly difficult to process and organise using data science methods. Compare: Structured data

In unsupervised learning, the input data are not labelled.   Rather, the machine learns to describe the structure of the data. For example, the characteristics of various companies can be fed in as inputs, and the algorithm then tries to group the companies into peer groups based on certain similarities other than the standard sector or country groupings. Compare: Supervised ...

Risk that is local or limited to a particular asset or industry.  Unsystematic risk may be due to negative events like earnings miss or accounting fraud.  Any event that potentially produces volatility in the stock price, like winning a major contract or mergers and acquisitions, also contribute to unsystematic risk.    As the rest of the market is largely unaffected, ...

Items which are unusual in nature, or infrequent in occurrence, but not both. (e.g. gains or losses from the sale of assets or part of a business, impairments, write-offs, write-downs, and restructuring costs. Unusual or infrequent items are included in income from continuing operations and are reported before tax. Even though such items affect net income from continuing operations, an ...

In the US, commercial paper is issued in US dollars only, with maturities of 270 days or less.  It is typically issued as a pure discount security, making a single payment equal to the face value at maturity. Prices are quoted as a percentage discount from face value. Compare: Eurocommercial Paper

US government entity that has the legal authority to enforce financial reporting requirements on US firms.

The US treasury issues: T-bills, which have maturities of less than one year. T-notes, which have maturities between 1 to 10 years. T-bonds, which have maturities of greater than 10 years.

The period for which an asset is expected to bring in economic benefit.