Posted in Marketing and Strategy Terms, Total Reads: 341
Definition: Value Date
A value date is the date in the future used to determine the value of a product whose price fluctuates. Timing of valuations of the products is one of the reasons because of which the price of the product fluctuate. Now, to determine the price of the product whose price fluctuates a value date can be used so that there is no discrepancy because of the timing of valuations.
For example, in case of certain bonds, the interest is carried out semi-annually. Currency contracts, options, futures, and interest on bank payments comes under this scheme of things.
Value date has different meanings according to the context. For example, in accounting the value date is when the entry to that account is considered effective. In the banking context, it is the date when the account holder can use the funds of his/her deposited checks when it is cleared in the banks.
A value date is important in finance context as it reduces the ambiguity in prices of the products, stocks or commodities because of timing of valuations. Value dates are an important concept in futures as the parties involved get into a contract to buy and sell the product at a pre-determined price. Irrespective of the prevalent prices the parties are obligated to sell their products at that price.