Financial Glossary – U

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Uberrimae Fidei – Latin for ‘utmost good faith.’ The term refers to insurance contracts. The insured must disclose everything that is pertinent to his or her insurance policy. If anything is held back, the policy is voidable, i.e., may become invalid. We also use the term uberrima fides.

Ubiquitous – refers to something that seems to be everywhere or seems to have the ability to be everywhere at the same time, i.e., omnipresent. In computer technology, the term refers to the interconnection of all electronic and electrical devices. That does not just mean computers, tablets, and smartphones, but also refrigerators, microwave ovens, and other devices we have at home, in the office, and outside.

Ullage – the air space between the fill level in a bottle of wine, for example, and the cork. Ullage or headspace is the air space at the top of a container that holds a liquid. In shipping, the container may also hold grains.

Ultimate Consumer – the person or entity that consumes or uses a product or service. They do not buy it and then sell it on or give it to somebody. The person who buys something, the customer, is not always the same person as the ultimate consumer. A mother buys baby food, but the ultimate consumer of it is her baby.

Ultra-Short Bond Fund – a type of bond fund that solely invests in fixed-income instruments that have very short-term maturities of no longer than a year.

Ultraviolet Radiation – comes from the Sun in the form of sunlight. Ten percent of the Sun’s light consists of ultraviolet radiation or UV radiation. UV radiation can darken our skin and burn it. It can also cause skin cancer, aging of the skin, as well as eye cataracts.

Umbrella Policy – an extra liability policy. With an umbrella policy, the insured continues receiving payment for liability after the primary policy has reached its limit. This type of policy protects people who believe they are at high risk of claims and lawsuits.

Uneconomic Growth – economic growth that leads to more harm than good. Perhaps the harm is environmental, economic, or social. If a country’s economy grows too rapidly, for example, the consequence could be a severe downturn that results in a long-lasting recession or depression. Excessive pollution is often the result of rapid GDP growth in many emerging economies.

Unemployment – occurs when people don’t have jobs and are seeking work. The unemployment rate is calculated by dividing the total number of unemployed by the number of people in the labor force. Unemployment can also mean unemployment benefit.

Unemployment Insurance – money and benefits eligible people receive when they become unemployed. We also call it benefits, UI, or unemployment compensation. To be eligible, you must have become unemployed through no fault of your own.

Unemployment Trap – when people are disuaded from taking a new job because their loss of unemployment benefits would leave them worse off. In other words, a situation in which your current standard of living, as an unemployed person on welfare, is better than it would be if you took a low-paying job. Unskilled workers and young adults are more likely to find themselves stuck in the unemployment trap.

Underlying Asset – a security (such as a stock) on which a derivative is based – determining its price.

Underground Economy – the part of the economy that the authorities know nothing about. People who work in the underground economy, also called the black economy, the informal sector, and the shadow economy, do not declare their income – they pay no tax on what they earn; this is illegal.

Underwriting – the process of determining whether a customer is eligible to receive capital from corporations and governments that issue securities.

Unicorn – a startup that is worth more than $1 billion. The number of unicorns appearing each year is growing rapidly. We also use the terms unicorn company or unicorn startup.

Union – 1. A workers’ trade union is an organization that represents workers and tries to get their employers to pay and treat them well. 2. A marriage is a union of two people. 3. A union can be a society or association of like-minded people. 4. In 1707, the Sottish and English parliaments united. We call this ‘The Union.’

Unique User – also called a Unique Visitor, is a website visitor who is only counted once during a period of one day, week, or month. It tells us how many different individuals visited a website during a specific period. It contrasts with the term ‘visit,’ which simply tells us how many times a website is visited.

Universal Bank – a bank that offers retail, wholesale, and investment banking under one roof. The world’s largest banks are universal banks.

Universe – everything that exists, including space, time, all matter, and energy everywhere. All the planets that exist, plus all the stars, galaxies, and other celestial bodies make up the universe. If I say ‘My universe,’ I might mean ‘my world,’ as in “My family is my universe.” In statistics, universe represents all possible elements in a set.

Unknown unknowns – things we neither understand nor are aware of. The term also refers to future situations or events that we cannot predict or plan for. In fact, we don’t even know where or when to look.

Unlimited Wants – the term refers to humans’ insatiable appetite for things. We are never satisfied – we always want more. However, the resources available to satisfy those wants are limited. The two halves of scarcity are limited resources and unlimited wants.

Unprofitable(of a business/activity) not making a profit or yielding financial gain. It also means, when referring to just an activity, not useful or beneficial. It is the opposite of profitable. No commercial enterprise aims to be unprofitable; they all want to be profitable.

Unsecured Loan – a loan with no security (collateral) or guarantor tied to it. The lender risks losing all its money if the borrower defaults. Also known as unsecured debt.

Unskilled Labor – members of the workforce who have no special training or skills. The term also refers to jobs that require no special training or skills. Unskilled labor contrasts with skilled labor or highly-skilled professionals.

Unsustainable – refers to anything that we cannot keep going in its current state or at its current rate. In other words, it is not ‘sustainable.’ For example, oil, butane gas, and coal are unsustainable energy sources. They are unsustainable because they will run out, i.e., they will not last forever. We cannot continue using them at current rates forever. They contrast with sustainable energy sources, such as sun, wind and hydro (water) power.

Unwholesome Demand – demand for things that are bad for us or society. The demand is there despite warnings. Groups warn people, for example, that smoking is bad. However, there is still demand for cigarettes, i.e., there is unwholesome demand for cigarettes.

Upper Class – the richest people in the country. There are three classes: 1. Upper class. 2. Middle class. 3. Working class. Members of the upper class represent a tiny proportion of a country’s population. However, they own a disproportionate percentage of its wealth.

Urbanization – refers either to the migration of people from rural to urban areas or the growth of city populations. The current urbanization, which is occurring in most countries across the world, started during the industrial revolution.

Usability – the ease of use and learnability of something, such as a device or tool. In software engineering, usability refers to the degree to which specific consumers can use a program successfully and easily.

User Experience – an individual’s responses and perceptions resulting from the use or anticipated use of something, i.e., a product, service, or system. Our user experience is our overall experience of using something, such as a website, smartphone application, or computer software.

User Friendly – a term that describes a device, program, or system that is easy to learn how to use. It is easy and perhaps also enjoyable to use. Some people say that the term has been overused and is a cliché today.

U-Shaped Recovery – an economic period that begins with economic decline, i.e., a recession. Then there is a trough that lasts a long time. Finally, there is a gradual recovery. We also call it a U-shaped recession. U-shaped recoveries last longer than others, such as V-shaped ones.

Usufruct – a right to use, enjoy, and make money from a property that does not belong to you. The person with a usufruct can derive an income from the property, but cannot damage it.

Usury – the act of loaning money at exorbitant interest rates. The term may be used as a moral condemnation of the act, or to inform about an illegally high interest rate. Originally, hundreds of years ago in the English language, ‘usury’ just meant lending money and charging interest, regardless of whether it was exorbitant or reasonable. Some countries have legislation to protect borrowers from abusive lenders.

Utilitarianism – a doctrine that suggests that the right action is the one that results in the most happiness for the greatest number of people. Conversely, a wrong action brings more unhappiness than happiness.

Utility – in economics the word refers to how much pleasure or satisfaction we derive when we consume a product or service, or experience an event. In business, a utility company generates, transmits and/or distributes utilities – electricity, gas or water. Utility may mean a computer program that improves the efficiency of an IT system. In patent law, the utility of a product refers to how useful it is – if an invention is not useful, it is virtually impossible to get it patented.

Utilization – the action of making use of something, i.e., using it effectively and in a practical way. It represents the percentage of total hours available that a machine, device, or person was productive, i.e., working. It also represents the percentage of all machines or people available that are currently working.