Financial Dictionary

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V Shaped Recovery

Type of economic recession and recovery that resembles a “V” shape in charting. Specifically, a V-shaped recovery represents the shape of the chart of certain economic measures. A V-shaped recovery involves a sharp decline in these metrics followed by a sharp rise back to its previous peak.

Vacancy Rate

The vacancy rate is a numerical value calculated as the percentage of all available units in a rental property, such as a hotel that are vacant or unoccupied at a particular time. It is the opposite of the occupancy rate, which is a calculation based on the percentage of units in a rental property that […]

Validation Period

Amount of time necessary for the premium on an insurance policy to cover the commissions, the cost of investigation, medical exams and other costs associated with the issuance of the policy. The validation period is the period of time that passes before an insurance product becomes profitable or until the product can start to contribute […]

Valuation

The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.

Valuation Analysis

Form of fundamental analysis that looks to compare the valuation of one security to another, to a group of securities or within its own historical context. Valuation analysis is done to evaluate the potential merits of an investment or to objectively assess the value of a business or asset. Valuation analysis is one of the […]

Valuation Clause

A provision in certain insurance policies that specifies the amount of money that the policy holder will receive from the insurer if an insured event occurs. The valuation clause a fixed amount of money that will be paid for insured property in the event of a loss.

Valuation Mortality Table

Statistical chart that is used by insurance companies to calculate the statutory reserve and cash surrender values of life insurance policies. A mortality table shows the death rate at any given age in terms of the number of deaths that occur for every thousand individuals of that age; it provides statistics regarding the likelihood that […]

Value

The monetary, material or assessed worth of an asset, good or service. In accounting, value describes what something is worth in terms of something else. In economics, value describes the merit of the benefits of ownership. The benefits of ownership include utility, the pleasure or satisfaction gained by consumption of a particular good or service; […]

Value Added

Enhancement a company gives its product or service before offering the product to customers. Value added is used to describe instances where a firm takes a product that may be considered a homogeneous product, with few differences from that of a competitor, and provides potential customers with a feature or add-on that gives it a […]

Value At Risk

A method for predicting possible portfolio losses by using statistical analysis of historical price trends and volatilities. VAR is widely used by banks and security houses to measure market risk their portfolios.

Value Averaging

An investment strategy developed by Michael E. Edleson, former Harvard University professor. Value averaged technique is based on monthly contributions to portfolio which is the same as in Dollar Cost Averaging (DCA) technique, but there is a main difference: when investor sets a target growth rate of the portfolio each month, he adjusts the contribution […]

Value Funds

A mutual fund that seeks to invest in undervalued and stocks that are temporarily out of favor with the market. Value fund investing is based on premise of market inefficiency, which sometimes leads companies to trade stocks at price below what they are worth. Led by assumption that stock will not stay undervalued indefinitely, value […]

Value Investing

Main philosophy behind value investing strategy is effort to buy stocks for less than they are worth, so called undervalued stocks.It is said that value investors seek good stock at great prices rather than great stocks at good prices. Undervalued stocks are stocks with market value lower than their intrinsic value. When buying undervalued stocks, […]

Value Line Index

An equal weighted stock index that ranks 1.700 stocks from American Stock Exchange, NASDAQ, NYSE and Over the Counter Market. Value Line Index projects which stocks will have above average or below average price performance over the next 6 to 12 months. This index also projects risk rating for each stock, expressed as volatility relative […]

Value Stock

A stock that is considered undervalued; a stock that trades at a price lower than its intrinsic value derived from the company’s fundamental indicators. Value stocks are characterized by low P/R ratio, low price to book ratio and high dividend yield. Investors who invest in value stocks are driven by belief that the stock will […]

Value Trap

Refers to a stock that seems to be undervalued at the first glance.Some stock can experience sharp declines, and therefore seem like a value stock. Inexperienced investors, who look only for price aspect of a stock quality, will often finish trapped in a stock that could decline even further if the reason is hidden in […]

Vanguard Exchange Traded Funds

Class of ETFs offered by Vanguard and traded like any other share on the American Stock Exchange. Vanguard ETFs with underlying indexes covering both individual sectors as well as domestic and international indexes. The ETFs are designed to track their underlying indexes as closely as possible and offer the increased flexibility of intraday trading.

Vanilla Option

Financial instrument that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price, within a given time frame. A vanilla option is a normal call or put option that has standardized terms and no special features. It is generally traded on an exchange such as […]

Vanilla Strategy

Approach to investing or to business decision-making that is basic and common. Some investors and businesses excel because they choose an ordinary, vanilla strategy, while others succeed through innovation. In derivatives trading, a vanilla strategy is the use of two different plain vanilla instrument at the same time.

Vanishing Premium

Type of periodic fee, paid in exchange for an insurance policy, that disappears because the investment return earned by the cash value of the policy is sufficient to pay the fee. Vanishing premiums are a feature of some permanent life insurance policies. After the policyholder pays the policy premium for a number of years, the […]

VantageScore

Consumer credit rating product developed by three credit rating agencies – Equifax, TransUnion and Experian – as an alternative to the FICO Score. VantageScore uses a different rating scale 501 to 990 than FICO 300 to 850, and is branded as a score that provides lending institutions and banks information related to subprime financing.

Variability

Extent to which data points in a statistical distribution or data set diverge from the average or mean value. Variability also refers to the extent to which these data points differ from each other. There are four commonly used measures of variability: range, mean, variance and standard deviation. The risk perception of an asset class […]

Variable Annuity

An insurance contract in which, at the end of the accumulation stage the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio.

Variable Cost

An expense that changes in proportion with activity of a business. For instance, such costs are labor or material costs. Together with Fixed costs Variable costs makes up the Total costs.

Variable Rate Security

Refers to a debt security where the rate changes as a function of a market indicator, such as the prime rate, and the U.S. Treasury bill or bond rate, or a combination of the two.