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Glossary of Investment Terms: V

Value at Risk
The expected loss from an adverse market movement.

Value Date
For exchange contracts it is the day on which the two contracting parties exchange the currencies which are being bought or sold. For a spot transaction it is two business banking days forward in the country of the bank providing quotations which determine the spot value date. The only exception to this general rule is the spot day in the quoting centre coinciding with a banking holiday in the country(ies) of the foreign currency(ies). The value date then moves forward a day. The enquirer is the party who must make sure that his spot day coincides with the one applied by the respondent. The forward months maturity must fall on the corresponding date in the relevant calendar month If the one month date falls on a non-banking day in one of the centers then the operative date would be the next business day that is common. The adjustment of the maturity for a particular month does not effect the other maturities that will continue to fall on the original corresponding date if they meet the open day requirement. If the last spot date falls on the last business day of a month, the forward dates will match this date by also falling due on the last business day. Also referred to as maturity date.

Value Spot
Normally settlement for two working days from today.

Value Today
Transaction executed for same day settlement; sometimes also referred to as "cash transaction."

Vanilla
A simple option whose terms and conditions do not include any provisions other than exercise style, expiry and strike. To compare with exotic options which have additional terms.

Variation Margin
Profits or losses on open positions in futures and options contracts which are paid or collected daily.

Vega
Expresses the price change of an option for a one per cent change in the implied volatility.

Velocity of Money
The speed with which money circulates or turnover in the economy. It is calculated as the annual national income: average money stock in the period.

Vertical (bear or bull) Spread
The sale of an option with a high exercise price and the purchase (in the case of a bull) or the sale (in the case of a bear ) of an option with a lower exercise price. Both options will have the same expiration date.

Visible Trade
Trade in merchandise goods as compared with capital flows and invisible trade.

Volatility
A measure of the amount by which an asset price is expected to fluctuate over a given period. Normally measured by the annual standard deviation of daily price changes. (historic). Can be implied from futures pricing, implied volatility.

Vostro Account
A local currency account maintained with a bank by another bank. The term is normally applied to the counterparty's account from which funds may be paid into or withdrawn, as a result of a transaction.