Definitions Starting with "V"

Vacancy Rate

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 For example, let's assume that Company XYZ owns an apartment building that has 300 units. Read more

Vacation Home

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. Read more

Vagit Y. Alekperov

Vagit Y. Alekperov is the founder of Russian oil giant Lukoil. Read more

Valuable Papers Insurance

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. Read more

Value Added Tax (VAT)

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. Read more

Value Averaging

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 dollar amount or percentage over time. The investment generally takes place each and every month regardless of what is occurring in the financial markets. Read more

Value Chain

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 chocolate chips as inputs and add value to these items by mixing them together, applying heat and putting the result in packages. Read more

Value Network

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 development units, for example, are key components of many companies' value networks. Read more

Value Proposition

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 company sells and why it is better to buy this particular product or service (instead of a competitor’s product or service). Read more

Value Stock

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 dividend yield (i. Read more

Value-Added Reseller

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 companies. Read more

Vance D. Coffman

Vance D. Coffman is the former chairman and CEO of Lockheed Martin Corporation. Read more

Vanguard Federal Money Market Fund (VMFXX)

The Vanguard Federal Money Market Fund, or VMFXX, is an investment fund offered through Vanguard that invests in U. S. Read more

Vanguard Prime Money Market Fund (VMMXX)

The Vanguard Prime Money Market Fund, or VMMXX, is an investment fund offered through Vanguard that invests in U. S. Read more

Vanilla Option

A vanilla option refers to a normal option with no special features, terms, or conditions. Options come in a variety of "flavors. Read more

Variability

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 stock has the following prices: The average of these prices is $21. Read more

Variable Annuity

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. Read more

Variable Costs

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. Read more

Variable Interest Rate

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. Read more

Variable Life Insurance Policy

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 a year in premiums. Read more

Variable Universal Life Insurance (VUL)

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 policy (though it is similar). Read more

Variable-Rate Certificate of Deposit

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, which agrees to pay interest on that deposit for the duration of the deposit. Read more

Variance

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 the budgeted or forecast amount. Read more

Vault Receipt

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. Read more

Veblen Good

A Veblen good is a good or service whose demand increases when its price increases. The term is named after economist Thorstein Veblen. Read more

Velocity of Money

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. Read more

Vendor

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 imaginable. Read more

Vendor Financing

Vendor financing is lending to a customer. Let’s say you plan to purchase inventory from Company XYZ  for $2 million. Read more

Vendor Note

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. Read more

Venn Diagram

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). Read more

Venture Capital (VC)

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 that have not yet come to market; early-stage capital, for companies in their first or second stages of existence; and expansion-stage financing, for companies that need to grow beyond a certain point to become truly successful. Read more

Venture Capitalist

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 are active primarily in the technology sector. Read more

Vernon L. Smith

Vernon L. Smith is an American economist who won the Nobel Prize for Economics in 2002. Read more

Vertical Equity

Vertical equity is the concept of increasing tax rates on higher incomes. Vertical equity is similar to the concept of progressive taxes. Read more

Vertical Integration

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, which manufactures frozen french fries, wants to vertically integrate. Read more

Vertical Market

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. Read more

Vertical Merger

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 products. Read more

Vest Fleece

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, for $10 a share. Read more

Vested Interest

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, it is known as a vested interest. Read more

Vesting

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 employer, for $10 a share. Read more

Viager

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 buy a $700,000 house in Paris. Read more

Viatical Settlement

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 receives the death benefit when the insured dies. Let's say John Doe has a year to live. Read more

Viator

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. Read more

Vittorio Mincato

Vittorio Mincato was the former CEO of Italian oil and gas company Eni. Born in 1936, Mincato is an accountant on paper. Read more

Vladimir Lenin

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 roots date to early in his life. Read more

Volatility Index (VIX)

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 market typically reverses course. Read more

Volume

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. Read more

Voodoo Accounting

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 unprofessional methods for making a company's profits appear larger than they really are. Read more

Voodoo Economics

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 stimulate an economy that lay stagnant after the Jimmy Carter years. The program, which rolled out in 1981 and was famously dubbed "voodoo economics" by George H. Read more

Voting Shares

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. Read more

Vulture Fund

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-poisoning scandal. Read more