Glossary

Welcome to Fineco’s Glossary! It will help you better understand the financial terminology and master your financial skills.

V

Value stock

A value stock is a unit of ownership in a company that is considered under-priced based on key information about the company’s finances and performance. The value of these stocks is expected to rise over the long term, making them popular with investors with long time horizons.

Investors who focus on value stocks dig deep into the fundamentals of a company and also use financial analysis to identify stocks that are undervalued. Warren Buffet is arguably the most famous value stock investor.

Value stocks are one of three main categories of stocks. The other two are growth stocks (shares in companies that are often new and considered to have large growth potential) and income stocks (stocks that pay large and consistent dividends, even if their value remains stable).

Virtual currency

A virtual currency is a type of digital currency that is not issued by a central bank or backed by a government, meaning that it is unregulated and is not legal tender. Rather, virtual currencies are electronic tokens of value issued by private organisations or developers and are based on trust in the issuer. Cryptocurrencies are a type of virtual currency that uses technology to keep them secure and avoid counterfeiting, as well as to control the supply of new units. Other virtual currencies are backed by the cash or assets of an entity but are not directly linked to legal tender, although they are traded and accepted by people as payment.

Volatility

In a financial context, volatility is the degree of fluctuation of the price of an asset over time. Higher volatility is usually associated with greater risk. It is often measured by taking a standard deviation of returns on an investment. Historic volatility is based on past data, while implied volatility is a projection of future price swings. Liquidity is one factor that influences volatility. More liquid markets, where securities can be bought and sold with more ease, tend to be less volatile.