Definition of Valuation Risk

Financial Terms Beginning with V

What is Valuation Risk

Valuation risk is the risk or probability of loss due to a difference in the accounting value of the investment and the market value. The investment may be overvalued and worth less when it matures or is sold. The risk can be significant for financial instruments or derivatives with complex features and limited liquidity.

Glossary of Terms and Phrases

A financial dictionary or glossary is an essential tool to better understand the meaning of a specialized term or phrase. It would obviously make life much easier if everyone spoke the same language and used the same financial terms and phrases but that is not realistic.

We learn new languages to communicate with each other, transact business globally and to appreciate other cultures. Global finance is a specialized language that if understood and mastered, it will provide benefits that help to decrease risk and improve investment returns. Financial literacy is the foundation of developing good investment strategies and sound decision making.

Related Investment Terms

Credit Risk

Commodity Risk

Inflation Risk

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