Okuzeka
Finance & Banking vocabulary · Risk Management

Economic value of equity

Meaning in finance & banking, with examples

nounAdvanced term

In finance & banking, economic value of equity means: The difference between the present values of relevant asset and liability cash flows, including applicable off-balance-sheet positions.

In Turkish: özkaynağın ekonomik değeri

How it is used

Often abbreviated EVE; it is a valuation measure distinct from reported accounting equity.

Example sentences

  1. The rate shock reduced the bank's economic value of equity.

    Discount-rate changes alter the net value of future cash flows.

  2. The model compared economic value of equity across several yield-curve scenarios.

    Scenario comparison reveals sensitivity beyond current earnings.

Common collocations

  • economic value of equity sensitivity
  • EVE change
  • equityThe owners' share of a company: what is left when liabilities are taken away from assets. It includes paid-in capital and retained profits.
  • stress testAn analysis that checks whether a bank would have enough capital and liquidity to survive a severe but possible shock, such as a deep recession.

More terms: Risk Management

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