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Variable
An element in a model. For example, in the model RS&Pt+1 = a + b Tbill t + et, where RS&Pt+1 is the return on the S&P in month t+1 and Tbill is the Tbill return at month t, both RS&P and Tbill are "variables" because they change through time; i.e., they are not constant.
Variable annuities
Investment contracts whose issuer pays a periodic amount linked to the investment performance of an underlying portfolio.
Variable cost
A cost that is directly proportional to the volume of output produced. When production is zero, the variable cost is equal to zero.
Variable interest rate
See Also: Adjustable rate
Variable life insurance policy
A whole life insurance policy that provides a death benefit dependent on the insured's portfolio market value at the time of death. Typically the company invests premiums in common_stock, so variable life policies are referred to as equity-linked policies.
Variable Plan
A plan in which either the number of shares and/or the price at which they will be issued is not known on the grant date.
Variable rated demand bond
Floating-rate bond that periodically can be sold back to the issuer.
Variable Ratio Write
An option strategy in which the investor owns 100 shares of the underlying security and writes two call options against it, each option having a different striking price.
Variable-price security
A security that sells at a fluctuating market-determined price stocks and bonds are example.
Variable-rate
A varible-rate agreement, as distinguished from a fixed-rate agreement, calls for an interest rate that may fluctuate over the life of the loan. The rate is often tied to an index that reflects changes in market rates of interest. A fluctuation in the rate causes changes in either the payments or the length of the loan term. Limits are often placed on the degree to which the interest rate or the payments can vary.
Variable-rate CDs
Short-term certificate of deposits that pay interest periodically on roll_over. On each roll date, the coupon on the CD is adjusted to reflect current market rates.
Variable-rate demand note
A note that is payable on demand and bears interest tied to a money market rate.
Variable-rate loan
Loan made at an interest rate that fluctuates depending on a base interest rate, such as the prime rate or LIBOR.
Variance
A measure of dispersion of a set of data points around their mean value. The mathematical expectation of the average squared deviations from the mean. The square root of the variance is the standard deviation.
Variance rule
Specifies the permitted minimum or maximum quantity of securities that can be delivered to satisfy a TBA trade. For Ginnie Mae, Fannie Mae, and Freddie Mac pass-through securities, the accepted variance is plus or minus 2.499999 % per million of the par value of the TBA quantity.
Variance-minimization approach to tracking
An approach to bond indexing that uses historical data to estimate the variance of the tracking error.
Variation margin
An additional required deposit to bring an investor's equity account up to the margin level when the balance falls below the maintenance margin requirement.
VAT
See: Value-added tax
Vault cash
Cash kept on hand in a depository institution's vault to meet day-to-day business needs, such as cashing checks for customers; can be counted as a portion of the institution's required reserves.
VC
The ISO 3166 country code for SAINT VINCENT AND THE GRENADINES.
VE
The ISO 3166 country code for VENEZUELA.
VEB
The ISO 4217 currency code for the Venezuelan Bolivar.
Vega
A term that describes the sensitivity of the option price to a one-percent change in volatility.
Velda Sue
Stands for Venture Enhancement and Loan Development Administration for Smaller Undercapitalized Enterprises. A federal agency that buys and pools small business loans made by banks, and then issues securities that are bought by large institutional investors.
Velocity
The number of times a dollar is spent, or turns over, in a specific period of time. Velocity affects the amount of economic activity generated by a given money supply.
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