Definition of X-Value Adjustment
What is X-Value Adjustment
X-value adjustment (XVA) is a collective term that covers the different types of valuation adjustments related to derivative contracts. The adjustments are made to account for the account funding, credit risk and capital costs.
When initiating new trades in the derivatives market, traders incorporate the x-value adjustment into the price of the derivative instrument. X-value adjustment is also known as a valuation adjustment.
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.