What is a Variance Swap? Variance swap refers to an over-the-counter financial derivative that allows the holder to speculate on the future volatility of a given underlying asset. Holders use variance swaps to hedge their exposure to the magnitude of possible price movements of underliers, such as exchange rates, interest rates, or an equity index….
What is Variation Margin? The term variation margin refers to a margin payment made by a clearing member to a clearinghouse based on the price movements of futures contracts held by the clearinghouse members. Clearing members are required to pay variation margins on a day-to-day or an intraday basis in order to reduce the risk…
What is Vested Benefit Obligation (VBO)? The term vested benefit obligation is used to signify the actuarial present value of a retirement plan. The retirement or pension plan in question is the one earned by employees, and may also commonly be used as one of the measures of the pension fund liability of a company….
What is a Vested Benefit? A vested benefit refers to an asset or a privilege that may be granted to an employee as part of a guaranteed financial package offered to any person or entity. Usually, the term “vested benefit” is used to denote the retirement savings that a person may become eligible to access…
What is Aggregate Stop-Loss Insurance? Aggregate stop-loss insurance is a type of insurance that protects the insured if the total number of claims under a specific coverage in their policy ends up being higher than anticipated. The aggregate stop-loss insurance is usually added to employer insurance policies that cover employees that opt into the policy….
What is Vested Interest? Vested interest refers to an entity’s personal involvement in a business project, an investment, or the outcome of a given situation. Usually, they are situations that include the possibility of financial gain or loss. The entity may be any organization, such as a company, or an individual. The term…
What is the Basic Materials Sector? The basic materials sector is made up of companies involved in the discovery, extraction, and processing of raw materials. It includes mining, forestry, and chemical production. Understanding Basic Materials Companies All physical goods are made up of a combination of basic materials processed to create a finished good. Basic…
What is Vanilla Strategy? Vanilla strategy refers to a mainstream approach to investment-related decision-making in businesses. The broad characteristics of a vanilla strategy are that it tends to be conservative and practical. Thus, such strategies generally include a minimal degree of risk. Rationale Behind Vanilla Strategies It is fairly common for investors to achieve by…
What is a Vanilla Option? The term “vanilla option” refers to a type of financial instrument that enables its holders to either buy or sell an underlier, which is an underlying asset, at a predetermined rate within a given time limit. The holder owns the right to sale or purchase of the underlying asset, without…
What is Volume Analysis? Volume analysis refers to the examination of the total number of securities transacted within a given time period. They can be shares or contracts of any given security. Technical analysts consider trading volume as one of the major indicators of the probability of success of a particular trading decision. Investors can…
