Asset Valuation Reserve - AVR

AAA

DEFINITION of 'Asset Valuation Reserve - AVR'

Capital required to be set aside in order to cover a company against unexpected debt. The asset valuation reserve serves as a backup for equity and credit losses. A reserve will have capital gains or losses credited or debited against the reserve account.

INVESTOPEDIA EXPLAINS 'Asset Valuation Reserve - AVR'

Usually the asset reserve consists of two components, a default component and an equity component. The default component protects future credit related losses, and includes arrangements for corporate debt securities, preferred stock, mortgage backed securities, farm, commercial and residential mortgages. For example, the National Association of Insurance Commissioners (NAIC) has to keep a liability reserve to cover claims in real estate and mortgages. The equity component has provisions for common stocks and real estate.

RELATED TERMS
  1. Working Reserves

    Reserves held by banks above the required minimum level - or ...
  2. Default Probability

    The degree of likelihood that the borrower of a loan or debt ...
  3. Loan Loss Provision

    An expense set aside as an allowance for bad loans (customer ...
  4. Allowance For Doubtful Accounts

    A contra-asset account that records the portion of a company's ...
  5. Default Risk

    The event in which companies or individuals will be unable to ...
  6. Bad Debt Reserve

    An account set aside by a company to account for and offset losses ...
RELATED FAQS
  1. Is a company's paid in capital affected by the trading of its shares in the secondary ...

    The amount of paid-in capital a company has is not affected by the trading of its shares on the secondary market. Paid-in ... Read Full Answer >>
  2. Why is the value of capital stock important to public shareholders?

    The value of a company's capital stock is important to public shareholders, because a company's capital stock represents ... Read Full Answer >>
  3. How do changes in capital stock illustrate the overall health of a company?

    Changes in capital stock normally illustrate that the overall health of a company is strong, and that it is seeking to raise ... Read Full Answer >>
  4. What is the difference between Class A shares and other common shares of company's ...

    The difference between Class A shares and other common shares of a company’s stock is usually the amount of voting rights ... Read Full Answer >>
  5. Does the profit or loss of a company affect its paid in capital?

    The profits or losses of a company do not affect its paid-in capital. Paid-in capital is generated solely by the sale of ... Read Full Answer >>
  6. Why do companies release financial figures in terms of fully diluted shares outstanding?

    The value of a company is determined by the number of shares it issues and the price at which these are traded on the stock ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Predicting Investment Losses

    How much you stand to lose on an investment and how long those losses will last can be gauged ahead of time.
  2. Active Trading Fundamentals

    Tips For Controlling Investment Losses

    A profit/loss plan helps investors recognize mistakes and invest logically, rather than emotionally.
  3. Active Trading Fundamentals

    A Look At Exit Strategies

    Setting appropriate exit points should help you avoid taking premature profits or running losses.
  4. Personal Finance

    Wall Street: Where The Customer Is Always Wrong

    In the financial industry, there's not much emphasis placed on dealing with customer complaints, but there should be.
  5. Active Trading Fundamentals

    Limiting Losses

    It is impossible to avoid them completely, but there is a systematic method you can use to control them.
  6. Economics

    What are Deliverables?

    Deliverables is a project management term describing an object or function that must be provided or completed by a certain due date.
  7. Investing Basics

    Explaining Net Tangible Assets

    Net tangible assets is a company’s total assets subtracting both intangible assets (such as goodwill and intellectual property) and total liabilities.
  8. Economics

    What Does Liquidation Mean?

    Creditors liquidate assets to try and get as much of the money owed to them as possible.
  9. Stock Analysis

    Google Stock: A Tale of Two Share Classes

    Google stock comes in two different flavors with different rights for shareholders.
  10. Investing

    7 Investing Mistakes Warren Buffett Regrets

    Even the “Oracle of Omaha” has made a few money mistakes investing, from losing billions by passing on stock options to companies destined to fail.

You May Also Like

Hot Definitions
  1. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  2. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  3. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  4. Current Account Deficit

    A measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services ...
  5. International Monetary Fund - IMF

    An international organization created for the purpose of: 1. Promoting global monetary and exchange stability. 2. Facilitating ...
  6. Risk-Return Tradeoff

    The principle that potential return rises with an increase in risk. Low levels of uncertainty (low-risk) are associated with ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!