Okuzeka
Finance & Banking vocabulary · Risk Management

Credit valuation adjustment

Meaning in finance & banking, with examples

nounAdvanced term

In finance & banking, credit valuation adjustment means: An adjustment to a transaction's value reflecting the counterparty's credit risk.

In Turkish: kredi değerleme düzeltmesi

How it is used

Abbreviated CVA; distinguish the valuation adjustment from a separate capital charge for changes in it.

Example sentences

  1. The derivative's credit valuation adjustment increased as the counterparty weakened.

    Credit deterioration changes the value of the promised cash flows.

  2. The valuation team updated the credit valuation adjustment after reviewing collateral.

    Collateral affects the unsecured exposure used in valuation.

Common collocations

  • credit valuation adjustment model
  • CVA exposure
  • counterparty riskThe risk that the other party in a financial deal, such as a derivative, repo or FX trade, fails to pay or deliver what it owes before the deal is completed.
  • valuationAn estimate of what a company, asset or property is worth, or the process of calculating it.

More terms: Risk Management

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This page explains English vocabulary for learners. It is not financial advice.