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A Credit valuation adjustment (CVA), [a] in financial mathematics, is an "adjustment" to a derivative's price, as charged by a bank to a counterparty to compensate it for taking on the credit risk of that counterparty during the life of the transaction. "CVA" can refer more generally to several related concepts, as delineated aside.
Under UK insolvency law an insolvent company can enter into a company voluntary arrangement (CVA). The CVA is a form of composition, similar to the personal IVA (individual voluntary arrangement), where an insolvency procedure allows a company with debt problems or that is insolvent to reach a voluntary agreement with its business creditors regarding repayment of all, or part of its corporate ...
The CVA (and xVA) applied to a new transaction should be the incremental effect of the new transaction on the portfolio CVA. [12] While the CVA reflects the market value of counterparty credit risk, additional Valuation Adjustments for debit, funding cost, regulatory capital and margin may similarly be added.
Cash value added (CVA) is a measure of business profitability defined as [1] the EBITDA generated by the business, less tax, less its required return. The required return is an annuity based on the purchase price of the assets in use in the business, inflated to today's value of money, the weighted average cost of capital (WACC) and the economic life of the assets.
Financial economics is the branch of economics characterized by a "concentration on monetary activities", ... [61] and a credit valuation adjustment, or CVA ...
The standardized approach for counterparty credit risk (SA-CCR) is the capital requirement framework under Basel III addressing counterparty risk for derivative trades. [1] It was published by the Basel Committee in March 2014.
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CVA does not encompass financial transactions such as payments to governments, remittances, or microfinance activities. These are separate categories of financial interactions, serving different purposes often related to long-term economic development or structural financial support, rather than direct crisis response.