Category: Financial Terms

Vertical Analysis What is vertical analysis? Vertical analysis expresses each line item in a financial statement as a percentage of a chosen base figure for the same reporting period. Common bases: – Income statement: net (or gross) sales/revenue = 100% – Balance sheet: total assets (or total liabilities + equity) = 100% – Cash flow…

Versioning: What It Means, How It Works, Examples What is versioning? Versioning (also called quality discrimination) is a business strategy in which a company offers multiple models or editions of essentially the same product at different price points. Each version targets customers with different willingness to pay by varying features, quality, or services so consumers…

Venture Philanthropy: What it Means, How it Works, Origins Venture philanthropy adapts techniques from venture capital to fund and scale social-purpose organizations. Rather than prioritizing financial return alone, it focuses on measurable social impact and capacity building, using active investor involvement and tailored support to accelerate growth and effectiveness. Key takeaways Venture philanthropy applies VC-style…

Venture Capitalist (VC) What is a venture capitalist? A venture capitalist (VC) is an investor or investment firm that provides capital to high‑growth private companies in exchange for equity. VCs typically fund startups that have moved beyond the idea stage — they have a product, some revenue or traction, and a plan to scale. How…

Venture Capital Trust (VCT): Meaning, Types, Example A Venture Capital Trust (VCT) is a U.K.-based closed-end fund created to channel private investment into small, early-stage British companies. Listed on public exchanges such as the London Stock Exchange (LSE), VCTs let retail investors gain indirect exposure to venture-style investments while providing tax incentives designed to encourage…

Venture Capital Funds Key takeaways * Venture capital (VC) funds pool capital from investors to take equity stakes in early-stage, high-growth companies. * They offer potentially high returns but carry high risk, illiquidity, and long time horizons. * VC firms typically take an active role in portfolio companies, providing capital, strategic guidance, and board involvement….

Venture-Capital-Backed IPO A venture-capital-backed IPO is an initial public offering by a company that was previously funded by venture capital (VC) investors. VCs use IPOs as an exit mechanism to convert their private equity stakes into liquid public shares and realize returns. Timing is critical: VCs typically wait for market conditions and company performance that…

Venture Capital: Definition, How It Works, Pros & Cons What is venture capital? Venture capital (VC) is a type of private equity financing for startups and early-stage companies with high growth potential. VC investors provide capital in exchange for equity and often contribute managerial guidance, industry connections, or technical expertise. Funding typically comes through venture…

What Is a Venn Diagram? Meaning, Examples, and Uses A Venn diagram is a visual tool that uses overlapping shapes—most often circles—to show the relationships between two or more sets. Shared traits appear in overlapping regions (intersections), while non-overlapping parts show differences (complements). Venn diagrams make similarities and differences easy to see at a glance…

Vendor Take-Back Mortgage: What It Is and How It Works A vendor take-back (VTB) mortgage — also called a seller take-back — is financing provided by the property seller to the buyer for part of the purchase price. Instead of borrowing the full amount from a bank, the buyer receives a loan from the seller,…

Vendor Note: Meaning, Terms, Pros and Cons Key takeaways A vendor note is a short- to medium-term loan a seller provides to a buyer to finance the purchase of the seller’s goods or equipment. These loans are usually secured by the purchased inventory or other business assets and commonly mature in about three to five…

What is Vendor Financing? Vendor financing (also called trade credit) is when a seller lends money or extends credit to a buyer to help purchase the seller’s goods or services. Rather than going to a bank, the buyer borrows directly from the vendor, often through deferred payments, short-term loans, or by exchanging company stock for…

Vendor: Definition, How It Works, Types, and Examples What is a vendor? A vendor is an individual or business that sells goods or services to other parties. Vendors appear at multiple points in the supply chain — from manufacturers and wholesalers to retailers and service providers — and are paid for the products or services…

Velocity of Money Key takeaways * The velocity of money measures how often a unit of currency is used to purchase goods and services over a period (typically a year). * It is calculated as GDP divided by a money-supply measure (M1 or M2). * Higher velocity usually accompanies stronger economic activity; lower velocity signals…

Vehicle Excise Duty (VED) Vehicle Excise Duty (VED) is a tax on most vehicles driven or parked on UK roads. It is collected annually and, for vehicles registered from April 2017 onward, the first-year rate is based on the vehicle’s carbon dioxide (CO2) emissions; subsequent annual payments are not linked to emissions. How VED works…

Vega Neutral Vega neutral is an options risk-management approach that removes a portfolio’s sensitivity to changes in implied volatility (IV). In a vega-neutral position, gains or losses from moves in IV are intended to offset each other so the portfolio neither benefits nor suffers when volatility changes. What is vega? Vega is one of the…

Understanding Vega in Options What is vega? Vega measures how much an option’s price is expected to change for a 1% change in the implied volatility of the underlying asset. It applies to both calls and puts — when implied volatility rises, option premiums typically increase; when it falls, premiums decrease. Explore More Resources ›…

VeChain — overview VeChain is a blockchain platform focused on supply-chain management, business processes, and enterprise-grade Web3 applications. Built to make product and process data actionable and verifiable, VeChain combines distributed ledger technology with IoT devices (RFID, sensors, NFC) to record product provenance, condition, and custody across a lifecycle. Origins and purpose Founded in 2015…

Veblen Good Definition A Veblen good is a luxury product for which demand rises as price rises. Unlike normal goods—where higher prices reduce demand—Veblen goods become more desirable when they are more expensive because price itself conveys exclusivity and status. How it works Demand for a Veblen good can display an upward-sloping demand curve over…

Vault Receipt What it is A vault receipt is a legal document that proves ownership of a physical commodity stored in an exchange‑approved vault or warehouse. It is most commonly used for precious metals (gold, silver, etc.) that serve as the underlying asset for futures contracts. Instead of physically moving metal bars, traders and holders…

Vasicek Interest Rate Model Introduction The Vasicek model is a foundational single-factor short-rate model used to describe the evolution of instantaneous interest rates. It is a stochastic, mean-reverting model frequently applied to value interest-rate derivatives, price bonds, and generate scenarios for future interest-rate paths. The model The Vasicek short-rate r(t) follows the stochastic differential equation:…

Variation Margin — Definition and Key Takeaways Variation margin is the payment made to cover daily (or intraday) changes in the market value of a trade. It represents the cash or collateral required to settle gains and losses as positions are marked to market, and it is used primarily by clearinghouses and brokers to limit…

Variance swap — overview A variance swap is an over‑the‑counter derivative that lets two parties exchange payments tied to the realized variance (the square of volatility) of an underlying asset over a specified period. It provides a direct, cash‑settled exposure to how much the asset’s price moves, without taking a directional position in the asset…

Variance Inflation Factor (VIF) A Variance Inflation Factor (VIF) quantifies how much the variance of an estimated regression coefficient is increased because of multicollinearity—correlation among the independent variables. Researchers use VIF to detect when predictor variables are too similar, which makes coefficient estimates unstable and difficult to interpret. How VIF works In multiple regression, multicollinearity…

Variance: Definition, Formula, and Example Variance measures how spread out values in a data set are around their mean. It quantifies variability by averaging the squared deviations of each observation from the mean. The symbol for variance is σ² (population) or s² (sample). The square root of variance is the standard deviation (σ or s),…

Variable universal life (VUL) insurance combines lifelong death benefit protection with a cash-value account that you can invest in subaccounts similar to mutual funds. It offers flexible premiums and tax-deferred growth, but places investment risk—and many fees—on the policyholder. How VUL works VUL is a permanent life insurance policy with two parts: a death benefit…

Variable Universal Life (VUL) Insurance Variable universal life (VUL) is a form of permanent life insurance that combines lifelong death benefit protection with a cash-value account you can invest in subaccounts that function much like mutual funds. It offers flexibility in premium payments and investment choice, but places investment risk and many costs on the…

Variable Ratio Write A variable ratio write is an options strategy in which an investor holds a long position in an underlying stock and sells (writes) more call options than the number of 100-share lots owned, typically at different strike prices. The goal is to collect option premiums as additional income on a stock the…

Variable-Rate Mortgage What it is A variable-rate mortgage (also called an adjustable-rate mortgage or ARM) is a home loan whose interest rate can change over time instead of remaining fixed for the life of the loan. Some variable-rate products are fully variable for the entire term; others are hybrid ARMs that start with a fixed-rate…

Variable Rate Demand Note (VRDN) Key takeaways * A VRDN (also called a VRDO) is a long-term municipal debt instrument with a floating interest rate and a demand (put) feature. * Interest resets to a prevailing short-term money-market rate (daily, weekly, or monthly) plus a spread. * VRDNs are typically issued in large denominations (commonly…

Variable-Rate Demand Bond: Definition and How It Works Key takeaways A variable-rate demand bond (VRDB) is a long-term municipal bond with a floating coupon that is periodically reset (daily, weekly, or monthly). Holders typically have an embedded put (demand) option allowing them to tender the bond back at par plus accrued interest on reset dates….

Variable-Rate Certificate of Deposit (CD) A variable-rate certificate of deposit (CD), sometimes called a flex CD, is a time deposit offered by banks and credit unions that locks your funds for a set term while the interest rate can change over that period. These CDs combine the principal protection of a traditional CD with an…

Fixed vs. Variable Interest Rates: Definitions, Benefits & Drawbacks A fixed interest rate stays the same for the life of a loan, giving predictable monthly payments and easier long-term budgeting. A variable (or adjustable) interest rate changes with market benchmarks, so payments can rise or fall over time. Key takeaways Fixed rates remain constant, making…

Variable Prepaid Forward Contracts A variable prepaid forward contract (VPFC) is a financial arrangement that lets a shareholder receive immediate cash for a block of shares while delaying recognition of capital gains until a later settlement date. It’s commonly used by founders, executives, and other holders of concentrated stock positions who want liquidity or diversification…

Variable Overhead Spending Variance Variable overhead spending variance measures the difference between the actual variable overhead costs incurred and the budgeted (standard) variable overhead costs for the level of activity in a period. It helps managers evaluate how well indirect production costs (like indirect materials, supplies, and utilities tied to production) were controlled relative to…