Category: Financial Terms

Value Change: What It Is and How It Works A value change describes how a stock’s market value or price adjusts in response to changes in the number of shares outstanding and other market forces. Investors and analysts use this concept to compare and weigh stocks within a group or index, especially when constructing equally…

Value Chain A value chain is the sequence of activities a company performs to design, produce, market, deliver, and support a product or service. Each step adds value for the customer and can be optimized to increase efficiency, reduce cost, and create competitive advantage. Key takeaways A value chain maps how value is created from…

Value-Based Pricing Value-based pricing sets a product or service’s price primarily on the value customers perceive it delivers, rather than on production cost. It’s most effective for differentiated, high-quality, or prestige offerings where buyers are willing to pay more for perceived benefits, status, or unique features. Key takeaways Prices are determined by what customers are…

Value Averaging Value averaging (VA) is an investment approach that adjusts periodic contributions to hit a predetermined target portfolio value path. Unlike dollar-cost averaging (DCA), which invests a fixed amount each period, VA raises or lowers the contribution so the total portfolio reaches a target amount (for example, increasing by $1,000 each quarter). If the…

What is Value at Risk (VaR)? Value at Risk (VaR) is a statistical measure used to estimate the potential loss in value of a portfolio, position, or firm over a specified time horizon and at a given confidence level. It answers questions like: “How much could I lose over one day or one month with…

Understanding Value-Added Tax (VAT) Value-added tax (VAT) is a consumption tax levied on goods and services at each stage of production and distribution where value is added. Unlike a retail sales tax, which is charged only at the final sale to the consumer, VAT is collected incrementally throughout the supply chain. Consumers ultimately bear the…

Value-Added Resellers (VARs) Definition A value-added reseller (VAR) is a company that purchases third-party products—typically hardware or software—and enhances them with additional services or customized components before reselling to end users. VARs are especially common in the information technology (IT) industry, where they provide integration, installation, support, and consulting on top of core products. How…

Value-Added Network (VAN) What is a VAN? A value-added network (VAN) is a private, hosted service that securely exchanges structured business data between organizations. VANs have traditionally supported electronic data interchange (EDI) transactions—standardized business documents such as purchase orders, invoices, and shipping notices—by acting as an intermediary that validates, formats, routes, archives, and provides audit…

Value Added Monthly Index (VAMI) Key takeaways * VAMI shows how a hypothetical investment grows over time, assuming monthly reinvestment of returns and compounding. * It is calculated using net monthly returns (after fees), making it a practical measure of investor-facing performance. * VAMI is commonly used to compare funds, evaluate managers, and visualize long-term…

Value-Added: Products, Marketing, and Economic Impact What is value-added? A value-added product or service offers more than its raw materials or basic function by including enhancements that justify a higher price. These enhancements can be tangible (features, quality materials) or intangible (brand reputation, customer experience, warranties, convenience). Businesses use value-added strategies to differentiate themselves, increase…

Value: What It Means in Business and Finance Key takeaways * Value is the assessed worth—monetary, material, or qualitative—of an asset, good, service, or company. * Valuation is the process of estimating that worth; it combines objective data and subjective judgement. * Common measures include market value, book value, enterprise value, and valuation multiples such…

Valuation Reserve: What It Is and How It Works What is a valuation reserve? A valuation reserve is an amount insurance companies set aside to protect against declines in the market value of assets they hold. It acts as a hedge for the investment portfolio so the insurer can meet long-term obligations—claims, policy benefits, and…

At a Premium: Meaning and Overview Key takeaways “At a premium” describes an asset priced above a chosen reference value (intrinsic value, market value, NAV, etc.). The phrase can be factual (e.g., an acquisition paid above market price) or subjective (an analyst’s view of overvaluation). Common forms include acquisition premiums, premiums to NAV for funds,…

Valuation Period Key takeaways The valuation period is the point in time when the value of a variable investment (such as a variable annuity or certain life insurance policies) is determined—often at the close of a business day. Valuation uses present-value and future-value concepts to convert between cash flows today and cash flows at different…

Valuation Mortality Table Key takeaways * A valuation mortality table is a statistical chart insurers use to estimate death rates at each age for pricing life insurance and setting statutory reserves. * Tables incorporate safety margins required by regulators (and often strengthened by insurers) to protect against unexpectedly high claims. * Actuarial age and premiums…

What is a valuation clause? A valuation clause is a contract provision that specifies how the value of an asset or loss will be determined and how much the party will receive if a covered event occurs. Most commonly found in insurance policies, valuation clauses define the method an insurer will use to calculate reimbursement…

Valuation Analysis: Meaning, Methods, and Uses Key takeaways * Valuation analysis estimates the fair or intrinsic value of an asset (company, security, real estate, commodity, etc.). * Common approaches include discounted cash flow (DCF), comparables (relative valuation), and asset- or income-based methods. * Results can be expressed as a single value, a range, or multiples…

Valuation — What it Is and How it Works Valuation is the process of estimating the fair or intrinsic value of an asset, business, or security. It helps determine whether something is overvalued or undervalued relative to its market price, and informs decisions like investing, buying or selling a company, raising capital, divestitures, and estate…

Valuable Papers Insurance Valuable papers insurance reimburses the monetary value or replacement cost of important physical documents that are lost or damaged. It’s commonly purchased by corporations, small businesses, law firms, medical practices, and high-net-worth individuals that rely on irreplaceable paper records. How it works The policy pays the insured amount for the value or…

Valoren Number: Definition and Uses What is a Valoren number? A Valoren number is a numeric identifier assigned to financial instruments in Switzerland. Typically 6–9 digits long, Valoren numbers uniquely label securities but do not embed any information about the instrument (for example, they do not indicate country, issuer or instrument type). How Valoren numbers…

Validation Code: What It Is and How It Works What is a validation code? A validation code (often called CVV, CVV2, CVC, or CV2) is a three- or four-digit number printed on a payment card that provides an extra layer of security for card-not-present transactions (online or phone purchases). Most cards show the code on…

Vacation Home What is a vacation home? A vacation home (also called a secondary or recreational property) is a dwelling other than your primary residence, used mainly for vacations or recreation. It can be any housing type—cottage, condo, cabin—and is often located away from where you live year-round. Many owners rent their vacation homes when…

Vacancy Rate: Definition, Calculation, and Uses What is a vacancy rate? A vacancy rate is the percentage of all available units in a rental property (for example, an apartment complex or hotel) that are unoccupied at a given time. It is the inverse of the occupancy rate; together they total 100%. How to calculate it…

VA Loan Key takeaways A VA loan is a mortgage option backed by the U.S. Department of Veterans Affairs and issued by private lenders for eligible veterans, service members, and some surviving spouses. VA loans typically allow up to 100% financing, require no private mortgage insurance (PMI), and have competitive interest rates. Borrowers must obtain…

V-Shaped Recovery What it is A V-shaped recovery describes a rapid and sustained rebound in economic activity following a sharp downturn. When plotted over time, measures such as GDP, employment, and industrial production show a steep decline followed by an equally steep recovery, forming a “V” shape. Key characteristics Rapid contraction: A sudden, pronounced drop…

UTXO (Unspent Transaction Output) Overview A UTXO (Unspent Transaction Output) is the discrete unit of cryptocurrency value recorded on UTXO-based blockchains after a transaction. Think of it as the “change” returned after spending: transactions consume existing UTXOs as inputs and create new UTXOs as outputs. UTXOs are not denominations themselves, but they can be measured…

What Is a Utilization Fee? A utilization fee is a periodic charge a lender may assess when a borrower’s outstanding balance on a credit facility exceeds a specified percentage of the available commitment. These fees are most common on revolving lines of credit and some business term loans. They are assessed in addition to normal…

Utility Revenue Bond: What It Is and How It Works A utility revenue bond is a type of municipal bond issued to finance public utility projects—such as water and wastewater systems, electricity and gas infrastructure, hospitals, and waste treatment facilities—where debt service is paid from the revenues generated by the project rather than from general…

Utility Patent: Definition, Rights, and How to Get One Key takeaways * A utility patent protects new or improved and useful products, processes, machines, or compositions of matter. * It grants the patent owner the exclusive right to make, use, sell, or import the invention for up to 20 years from the filing date (subject…

Utility (Economics) Utility describes the satisfaction or benefit a consumer derives from consuming a good or service. It is a foundational concept in microeconomics used to explain consumer choice, demand, and pricing. Key takeaways Utility measures the usefulness or satisfaction a consumer receives from a good or service. Cardinal utility treats satisfaction as measurable (in…

Utilities Sector The utilities sector comprises companies that provide essential services such as electricity, natural gas, water and sewage, and related transmission and distribution. These firms are typically heavily regulated, capital-intensive, and regarded by many investors as long-term, income-producing holdings due to their steady dividend payouts and relatively low price volatility. Key takeaways Utilities supply…

Utilities Sector and Utilities ETFs The utilities sector comprises companies that produce or deliver essential services such as electricity, natural gas, water, and sewage. These firms are typically regulated, capital-intensive, and positioned as income-oriented, defensive investments. Key Takeaways Utilities provide essential services and are heavily regulated. They commonly offer stable dividend income and lower price…

Utilitarianism: A Concise Overview What is utilitarianism? Utilitarianism is an ethical theory that evaluates actions by their consequences, holding that the right action is the one that produces the greatest net benefit (usually interpreted as happiness, pleasure, or well‑being) for the greatest number of people. It is a consequentialist, reason‑based approach to moral decision‑making. Core…

Usury Rate — Meaning, Rules, and Examples Key takeaways * A usury rate is an interest rate deemed excessively high and often illegal. * In the U.S., usury limits are set by state law; there is no federal ceiling for most consumer loans. * Some types of debt (notably many credit cards and nationally chartered…

Usury Laws What are usury laws? Usury laws limit the interest lenders may charge on loans to protect borrowers from excessively high or abusive rates. In the United States, these limits are set and enforced primarily at the state level. Federal involvement has been limited, though federal statutes and court rulings have shaped how state…