Financial Definitions Starting with "V"

Vacancy rate is the ratio of rental units not rented versus the total number in the building, city, state, etc. The formula for vacancy rate is: Vacancy rate = Units not rented out / Total units...

A vacation home is a house that the owner uses only a few days or weeks per year. Let's say John Doe lives in Minneapolis. He gets sick of the winters there and buys a house in Phoenix. He spends two...

Vagit Y. Alekperov is the founder of Russian oil giant Lukoil. Born in 1950 in Baku, Azerbaijan, Alekperov is the youngest of five children. He went into the oil industry at the age of 22 a...

Valuable papers insurance is a kind of property insurance that protects documents such as wills, share certificates, or other crucial paper items. Let's say Company XYZ's headquarters burns down. Ins...

VAT is the most common type of consumption tax and currently used in more than 160 countries, including each member of the EU. The notable exception to this rule is the US.  For products or serv...

Value averaging is a strategy in which an investor places a variable dollar amount into a given investment (usually common stock) on a regular basis to ensure that the investment grows by a certain do...

The value chain is the process through which a company turns raw materials and other inputs into a finished product. For example, Company XYZ might take sugar, flour, eggs, baking powder, vanilla and...

A value network is a system that organizations, departments, operating units or people use to do work, buy or sell products, or create plans that benefit the entire organization. Research and develop...

A value proposition is a marketing statement that positions a company’s products in the mind of the consumer as the best one for their needs. It clearly, easily, and concisely articulates what the c...

A value stock is a security that is trading at a lower price than expected given the performance of the company and key performance indicators of the stock itself.A value stock may have a high dividen...

A value-added reseller (VAR) is an entity that adds features or services to a product and resells the combination as a package. For example, let's say Company XYZ installs accounting software for...

Vance D. Coffman is the former chairman and CEO of Lockheed Martin Corporation. Born in Kinross, Iowa, on April 3, 1944, Coffman earned his bachelor's degree in aerospace engineering from Iowa State ...

The Vanguard Federal Money Market Fund, or VMFXX, is an investment fund offered through Vanguard that invests in U.S. government securities. As its main goal is to provide current income and preser...

The Vanguard Prime Money Market Fund, or VMMXX, is an investment fund offered through Vanguard that invests in U.S. government securities and foreign bonds. As its main goal is to provide current i...

A vanilla option refers to a normal option with no special features, terms, or conditions. Options come in a variety of "flavors." A plain vanilla option offers the right to purchase o...

Variability is the degree to which a data series deviates from its mean (or in the accounting world, how much a budgeted value differs from an actual value). For example, let's say Company XYZ st...

A variable annuity is a contract sold by an insurance company. The contract provides the holder with future payments based on the performance of the contract's underlying securities. The insurer g...

Variable costs are the direct costs a company incurs when producing goods or services. Variable costs are incurred in direct proportion to the quantity of goods or services produced.  Simp...

A variable interest rate is an interest rate that can change from time to time. For example, let's say that you want to borrow $5,000 to start a business. Company XYZ offeres you a variable inter...

A variable life insurance policy allows the account holder to invest a portion of the premium paid for the policy. Let's say John Doe buys a variable life insurance policy and pays $10,000 ...

Variable universal life insurance is a type of life insurance policy that allows the account holder to invest a portion of the premium dollars. It is not the same as a variable life insurance p...

A variable-rate certificate of deposit (CD) is a CD with an interest rate that can change. A CD is an investment whereby the investor deposits a certain amount of money with a bank or credit union, w...

Variance is a statistical measure of how much a set of observations differ from each other. In accounting and financial analysis, variance also refers to how much an actual expense deviates from ...

A vault receipt is a document that proves ownership of gold, silver or other precious metals stored elsewhere. Let's say John Doe purchases gold through a futures contract. The contract expires a...

A Veblen good is a good or service whose demand increases when its price increases. The term is named after economist Thorstein Veblen. Many luxury goods are Veblen goods. That is, the more expensive...

The velocity of money is the average frequency with which a unit of money is spent in an economy.For example, assume a very small economy that has a money supply of $100 and only two people. Bob sells...

A vendor is a company or person that sells goods or services. Vendors sell accounting services, food, electricity, hair styling, maid service, toilet repair, and just about anything else im...

Vendor financing is lending to a customer. Let’s say you plan to purchase inventory from Company XYZ  for $2 million. You only have $200,000 in cash and want to pay Company XYZ over ...

A vendor note is a short-term loan to a customer. Let's say you plan to purchase inventory from Company XYZ  for $2 million. You only have $200,000 in cash and want to pay Company XYZ ...

A Venn diagram is an illustration of common characteristics. Named after John Venn, a Venn diagram is often little more than two or more overlapping circles (you can use other shapes, too)....

Venture capital is money for new, young, and/or small businesses that typically have little or no access to capital markets. There are three general types of venture capital: seed capital, for ideas ...

Venture capitalists provide funding (called venture capital) to start-up companies which they see as promising investments, but which otherwise are unable to obtain business loans. Venture capitalists...

Vernon L. Smith is an American economist who won the Nobel Prize for Economics in 2002. Born in 1927 in Wichita, Kansas, Vernon L. Smith earned an engineering degree from Cal Tech in 1949 and a maste...

Vertical equity is the concept of increasing tax rates on higher incomes. Vertical equity is similar to the concept of progressive taxes. The United States has a vertical equity tax system, which mea...

Vertical integration describes a company's control over several or all of the production and/or distribution steps involved in the creation of its product or service.Let's assume XYZ Company, ...

A vertical market is a niche market in which a company supplies goods or services to a very specific type of customer. Its goods or services do not have broad appeal or application. Let’s assum...

A vertical merger (also called vertical integration) is a merger between a manufacturer and a supplier. This is different from a horizontal merger between two companies that manufacture similar produc...

A vest fleece occurs when a company accelerates the vesting of its employee stock options. For example, let's assume that John Doe receives options to buy 2,000 shares of Company XYZ, his employer, f...

A vested interest is a right of ownership which is not dependent on something else.When a possession, ownership interest or the use of tangible property is present and unencumbered by any conditions, ...

Vesting occurs when a financial instrument or account becomes wholly owned by an investor. For example, let's assume that John Doe receives options to buy 2,000 shares of Company XYZ, his employe...

A viager is a French method of real estate sale whereby the buyer makes a down payment and agrees to make a series of payments for the rest of the seller's life. Let's say John Doe wants to b...

A viatical settlement occurs when a person who is chronically or terminally ill sells his or her whole or universal life insurance policy to a third party that maintains the premium payments and recei...

In the insurance world, a viator is a terminally ill person who sells his or her life insurance policy. A viator participates in viatical settlements. A viatical settlement occurs when a person who i...

Vittorio Mincato was the former CEO of Italian oil and gas company Eni. Born in 1936, Mincato is an accountant on paper. His first any only employer was Italian oil and gas company Eni, where he rose...

Vladimir Illyic Ulyanov, also known as Vladimir Lenin, was the first leader of the Soviet Union and a key player in its October Revolution. Born in 1870 as Vladimir Ulyanov, Lenin's revolutionary...

The Volatility Index (VIX) is a contrarian sentiment indicator that helps to determine when there is too much optimism or fear in the market. When sentiment reaches one extreme or the other, the marke...

Volume represents the total number of securities traded during a certain period of time.Volume records the number of transactions taking place during a period of time. It is a direct measure of liquid...

Voodoo accounting refers to any accounting practices that artificially inflate the profits reported on a company's financial statements.Voodoo accounting comprises a wide range of unethical and un...

Also called “Reaganomics,” voodoo economics is the nickname for the hallmark economic policy of Ronald Reagan, the 40th President of the United States (1981-1989), who was trying to stimul...

Voting shares are shares of stock that allow the owner to vote on company matters. Stocks, also known as equities, represent ownership interests in corporations. If you own one, 100, or 100 million s...

A vulture fund is a pool of investor money that makes investments in securities from distressed issuers (usually bonds). Let's say Company XYZ has lost 75% of its customers due to a food-poisonin...