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Variable Overhead Variable overhead are manufacturing and operating costs that change in direct proportion to production output. Unlike fixed overhead (rent, insurance, salaried managers), variable overhead rises when production increases and falls when production decreases. Examples include production supplies, utilities for equipment, and wages or overtime for production and shipping staff. Key points Variable overhead…

Variable Life Insurance What it is Variable life insurance is a type of permanent life insurance that combines a death benefit with an investment component. Part of the premium is allocated to separate accounts invested in stocks, bonds, and mutual-fund–style portfolios. Because the cash value is invested, variable life policies are treated as securities and…

Variable Interest Rate: Definition, How It Works, Pros & Cons What is a variable interest rate? A variable (or adjustable/floating) interest rate is one that changes over time because it is tied to an underlying benchmark or index. As that benchmark moves, the borrower’s interest rate and payments typically rise or fall. This contrasts with…

Variable Interest Entities (VIEs) Key takeaways * A VIE is an entity controlled through contractual arrangements rather than majority voting equity. * Control is determined by who directs the activities that most affect the entity’s economic performance and who absorbs its significant losses or receives its significant benefits. * When a company is the primary…

Variable Death Benefit A variable death benefit is the portion of a variable universal life (VUL) insurance payout that varies with the performance of the policy’s investment (cash value) account. In a VUL policy, premiums fund both the insurance protection (the guaranteed face amount) and an investment account that can be allocated among the insurer’s…

Variable Coupon Renewable Note (VCR) A Variable Coupon Renewable Note (VCR) is a short-term debt security whose interest rate is periodically reset and whose principal is automatically reinvested at each maturity. The coupon varies with a reference short-term rate (commonly the 91‑day Treasury bill rate) plus a fixed spread. VCRs continue to roll over until…

Variable Cost Ratio: What it Is and How to Calculate It Definition The variable cost ratio (VCR) measures the portion of sales revenue consumed by variable costs. It shows how much of each dollar of sales is used for costs that change with production (materials, direct labor, shipping, etc.), and it helps managers evaluate profitability…

Variable Cost-Plus Pricing Variable cost-plus pricing sets a product’s selling price by adding a markup to the variable cost per unit. The markup is intended to contribute toward fixed costs and produce a profit. This method is inward-looking: it focuses on internal costs rather than market demand, competitor prices, or perceived customer value. How it…

Variable Cost A variable cost is a business expense that changes in direct proportion to production or sales volume. Unlike fixed costs (rent, salaried overhead), variable costs increase when output rises and fall when output declines. How variable costs behave Total variable cost changes with the quantity produced; variable cost per unit is typically constant…

Variable Benefit Plan: Meaning and History A variable benefit plan (also known as a defined-contribution plan) is a retirement plan in which the payout varies with the market performance of the plan’s investments. Common examples include 401(k) accounts, where contributions are defined but the ultimate benefit depends on investment returns. Key takeaways Variable benefit plans…

Variable Annuity A variable annuity is an insurance contract that creates a retirement income stream whose value and payout vary with the performance of underlying investments. Investors fund the contract with a lump sum or a series of payments; the insurer invests those funds in sub-accounts (similar to mutual funds) and later pays the investor…

Variable Annuitization: What It Is and How It Works Variable annuitization is an option for converting an annuity’s accumulated value into a stream of periodic income payments that fluctuate with the performance of the annuity’s underlying investments. It’s chosen during the annuitization phase, when the contract holder exchanges the contract’s value for guaranteed income for…

Variability Variability describes how values in a dataset spread out or cluster around their average (mean). It quantifies dispersion and is a core concept in statistics and finance—especially when assessing the behavior of asset returns. What variability means In statistics: the degree to which data points differ from each other or from the mean. In…

VantageScore: Meaning, Model, Components At a glance * VantageScore is a consumer credit-scoring model developed jointly by Equifax, Experian and TransUnion as an alternative to the FICO score. * Current range: 300–850 (earlier versions used 501–990). * Latest version: VantageScore 4.0, which uses machine learning and trended credit data to improve predictiveness and to score…

Vanishing Premium: What It Is, How It Works, Example A vanishing premium is a feature of some permanent life insurance policies that lets dividends and cash value growth cover future premium payments. Instead of paying premiums out of pocket indefinitely, the policyholder uses the policy’s internal earnings to reduce — and sometimes eliminate — the…

Vanilla Strategy: What It Is, How It Works, Example A vanilla strategy describes a simple, straightforward approach—typically conservative and low in complexity—used in investing or business. It favors proven, easy-to-understand choices over niche or highly leveraged tactics. While not flashy, vanilla strategies can deliver reliable, long-term results and are often easier for most people to…

Understanding Vanilla Options A vanilla option is a standard options contract that gives its holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price (the strike price) within a specified time frame. Vanilla options come in two basic forms—calls and puts—and lack the special triggers or payoff…

Vanguard Exchange-Traded Funds: How They Work and Types Vanguard exchange-traded funds (ETFs) combine the diversification of index mutual funds with the tradability of individual stocks. They track underlying indexes, trade on U.S. exchanges throughout the day, and are designed to be low-cost, professionally managed building blocks for a range of portfolios. Key takeaways * ETFs…

Vandalism and Malicious Mischief Insurance Vandalism and malicious mischief insurance covers intentional damage to property caused by vandals. It’s commonly included in basic homeowners and commercial policies or added as a specific endorsement. This coverage protects both the structure and personal property on the premises from deliberate destruction, subject to policy limits and deductibles. Key…

Canadian Securities Exchange (CSE): What it is and How it Works Overview The Canadian Securities Exchange (CSE) is an electronic stock exchange in Canada that provides an alternative public market primarily for small-cap and emerging companies. It operates without a physical trading floor and is designed to simplify access to public capital markets for growth-stage…

Valued Policy Law (VPL) Key takeaways Valued Policy Law (VPL) requires insurers to pay the policy’s stated dollar amount when a covered loss is deemed a total loss, regardless of the property’s actual cash value at the time of loss. The payment basis under VPL may be determined using actual cash value (ACV) or replacement…

Valued Marine Policy: What It Is and How It Works Overview A valued marine policy is a form of marine insurance that records a fixed, agreed value for the insured subject matter (for example, a ship’s hull or specific cargo). If a covered loss occurs and there is no fraud, the insurer pays the pre‑determined…

Value Trap: What It Is and How to Avoid It What is a value trap? A value trap is an investment that appears cheap based on valuation metrics (P/E, P/CF, P/B, EV/EBITDA) but remains undervalued because the company’s fundamentals are deteriorating or its prospects are poor. Investors buy in expecting a recovery, only to see…

Value Stock: Definition, How to Find Them, and Key Differences from Growth Stocks What is a value stock? A value stock trades below what investors believe is its intrinsic worth based on fundamentals such as earnings, book value, sales, or dividends. These stocks typically come from mature, established companies and may be temporarily out of…

SEC Form 10-Q: Quarterly Reporting Explained SEC Form 10-Q is the quarterly financial report public companies must file with the U.S. Securities and Exchange Commission. It provides unaudited financial statements and disclosures about a company’s financial condition and operations for each of the first three fiscal quarters. The fourth quarter is reported in the annual…

What is a value proposition? A value proposition is a concise marketing statement that explains why a customer should choose a product or service. It clarifies the specific benefits delivered, how the offering meets a need, and what differentiates it from competitors. A clear value proposition helps attract customers, guide messaging, and sustain a company’s…

Value of Risk (VOR) Value of Risk (VOR) is the financial benefit that a risk-taking activity brings to an organization’s stakeholders. It frames risk-related spending and decisions as investment opportunities: each component of the cost of risk must show an adequate return relative to its cost and alternatives. Key takeaways VOR measures the expected financial…

Value Network Analysis What it is Value network analysis (VNA) assesses an organization’s participants and the interactions among them to understand how value is created, exchanged, and distributed. Typically presented as a diagram or map, VNA captures both financial and non-financial relationships between people, teams, business units, suppliers, partners, and customers. Why it matters Reveals…

Value Network Key takeaways A value network is a set of connected organizations and individuals whose interactions create and exchange value for the whole group. Members can buy and sell goods or services and share knowledge, resources, and influence. Value networks are often visualized as nodes (members) and connectors (relationships). They include both internal resources…

Value Line Composite Index The Value Line Composite Index is a broad stock index that tracks roughly 1,700 companies from major North American markets, including the NYSE, American Stock Exchange, Nasdaq, Toronto exchanges, and over-the-counter listings. It reflects the universe of companies covered in the Value Line Investment Survey (excluding closed‑end funds) and is published…

Value Investing What is value investing? Value investing is a long-term strategy of buying stocks that appear to trade below their intrinsic worth. Practitioners seek companies whose market prices reflect short-term problems, pessimism, or neglect rather than long-term fundamentals. The goal is to buy with a margin of safety and profit when the market recognizes…

Value Funds: Overview and Key Takeaways A value fund is a pooled investment vehicle—mutual fund or ETF—that focuses on buying stocks considered undervalued relative to their fundamental worth. The strategy relies on the idea that market prices sometimes deviate from intrinsic value; when the market corrects, the stock price should rise, producing returns for investors….

Key takeaways Value engineering (VE) is a systematic approach to maximize a product’s function while minimizing its cost without degrading quality. VE focuses on what a product or process must do (its functions) rather than on physical attributes. A common formula: Product value = Function / Cost. VE typically follows six phases: gather information, generate…

What is value deflation (shrinkflation)? Value deflation, commonly called shrinkflation, occurs when businesses reduce the quantity or quality of a product or service while keeping the nominal price unchanged. Instead of increasing the sticker price, firms deliver less — smaller packages, shorter service times, lower-grade inputs, or diminished durability — effectively raising the price per…

Value Date: What It Means in Banking and Trading What is a value date? A value date is the date on which the value of funds, assets, or a financial transaction becomes effective. It’s used to determine when money is available, when a trade is settled, or which day’s rates apply when calculating interest or…