Financial Terms Dictionary - Letter V

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Valuation risk

Valuation risk pertains to the potential for a difference between the estimated value of an asset and the price eventually received upon its sale or the realisation of its value.Learn more

Value at Risk (VaR)

Value at risk is a statistical technique used to measure and quantify the level of financial risk within a firm or investment portfolio over a specific time frame.

Value investing

Value investing is an investment strategy that involves picking stocks that appear to be trading for less than their intrinsic or book value. Investors in this strategy believe the market overreacts to good and bad news, resulting in stock price movements that do not correspond with a company's long-term fundamentals.

Value stocks

A value stock is a stock that tends to trade at a lower price relative to its fundamentals, such as dividends, earnings, or sales, making it appealing to value investors.

Variable Cost

Variable costs are expenses that change in proportion to the activity of a business. In other words, they increase as activity rises and decrease as activity falls.

Variance Inflation Factor (VIF)

The variance inflation factor is a measure of the amount of multicollinearity in regression analysis, providing an index that measures how much the variance of an estimated regression coefficient increases because of collinearity.Learn more

Velocity of money

The velocity of money is the rate at which money is exchanged in an economy. It is calculated as the ratio of nominal GDP to a country's total supply of money.

Venture Capital

Venture capital is financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.Learn more

Venture capital trust

A venture capital trust is a type of publicly listed closed-end fund found in the UK designed to provide private equity capital for small expanding companies and capital gains for investors.

Venture fund

A venture fund is a pooled investment vehicle (often a partnership) that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans.

Vesting

Vesting is the process by which an employee accrues non-forfeitable rights over employer-provided stock incentives or employer contributions made to the employee's qualified retirement plan account or pension plan.

Virgin Superannuation

Virgin superannuation refers to retirement pension plans provided by Virgin Money, an international financial services brand. These plans are designed to help individuals in Australia save for retirement.

Virtual bidding

Virtual bidding is a practice in electricity markets where participants place bids on the wholesale purchase and sale of electricity without intending to take physical delivery of the power, used primarily to capitalise on price differences.

Volatility

Volatility refers to the degree of variation of a trading price series over time, typically measured by the standard deviation of logarithmic returns. High volatility means that a security’s price can change dramatically over a short period in either direction.

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Volatility risk

Volatility risk is the risk of change in value of a financial derivative based on the volatility of the underlying asset’s market prices. This risk can impact investment portfolios, particularly those that include complex securities like options and futures.Learn more

Voleo

Voleo is a social trading platform that allows users to form investment clubs with their peers to democratically manage and make trades in a shared brokerage account, enhancing the social aspect of investing.

Volume risk

Volume risk arises from the possibility of trading a lower amount of a particular asset than expected, potentially affecting the profitability of financial operations, particularly for businesses dependent on certain volumes of sales or transactions.

Volume-weighted average price (VWAP)

VWAP, or volume weighted average price, is a trading benchmark used particularly in pension plans, calculated by adding up the dollars traded for every transaction (price multiplied by number of shares traded) and then dividing by the total shares traded for the day.

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Voting interest

Voting interest refers to the percentage of voting rights held by a shareholder within a company. This determines the shareholder’s power to vote on company matters at shareholders’ meetings.

Vulture fund

A vulture fund is a type of hedge fund or private equity fund that invests in debt considered to be very weak or in default, known as distressed securities. These funds often profit from buying cheap debt on the brink of recovery.