Economic Value Of Equity (EVE) Financial Glossary

What is it? One measure of exposure to interest rate risk. The difference between the sum of the present values of all cash flows from assets and the sum of the present values of all cash flows from liabilities. This difference is a proxy or estimate used for capital when the sensitivity of capital to changes in prevailing interest rates is calculated. The rate risk exposure target focuses on the amount of change in the economic value of equity that might result from a change in prevailing interest rates. It is a long-term, economic target for measuring rate risk exposure. Previously known by the less-accurate name market value of portfolio equity or MVPE. Sometimes called net portfolio value (NPV).

Finance Term Definition Added By: Morgan

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