Value index numbers, Financial Management

Assignment Help:

Value Index Numbers

The value index number as described earlier is a combination index which combines price and quantity changes. Because of the difficulties experienced in price and quantity indices, the usage of the value index has been suggested. The value index number can be calculated by the following formula,

=

885_value index numbers.png

where, P1, Q1, P0 and Q0 follow the usual notations.

Interestingly, in value indices, weights need not be used as they are inherent in these indices. The value index, an aggregate of all values, measures the changes in values in the base year and the values in the given year. The value index can also be obtained by the product of price and quantity indices. Let us calculate the value of some equity shares owned by an investor on July 27, 20x1 relative to the value of the shares owned by him on Jan 8, 20x0 as measured by the value index.

Value Index

1682_value index numbers1.png


Related Discussions:- Value index numbers

Explain the term - timing of benefits, Explain the term - Timing of Benefit...

Explain the term - Timing of Benefits A more significant technical objection to profit maximisation, as a guide to financial decision making, is that it ignores the differen

Determine the preference shares - equity instruments, Determine the Prefere...

Determine the Preference Shares - Equity Instruments Sandwiched between equity share holders anddebt holders, preference share holders have promise of an assured dividend from

How is finance related to accounting and economics, How is finance related ...

How is finance related to the disciplines of accounting and economics? Financial management is fundamentally a combination of economics and accounting. First financial managers

Need for assessing the risks , Define risk. Examine the need for assessing ...

Define risk. Examine the need for assessing the risks in a project

Help ASAP, If firm A has a higher debt-to-equity ratio than firm B then tha...

If firm A has a higher debt-to-equity ratio than firm B then that means what

Pros and cons of simulation technique, Pros and Cons Simulation techniq...

Pros and Cons Simulation technique allows experimentation with a model of the real life system. Whenever experimenting with the system itself is risky and/or costly, simulation

Cost of capital, what is the major value of the weighted cost of capital ca...

what is the major value of the weighted cost of capital calculation for the firm?

Determine about the risk management systems, Determine about the risk manag...

Determine about the risk management systems Management must report to board their review and implementation of internal controls and risk management systems. The board must rev

Options markets, Options Markets: Man has always been innovative and in...

Options Markets: Man has always been innovative and ingenuous. His determination to improvise and overcome the limitations of various processes has resulted in phenomenal and e

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd