Computation of weights or proportions, Finance Basics

Assignment Help:

Computation of Weights or Proportions

In computation of the weights or proportions of different capital components, the following values might be used like as:

  1. Market values
  2. Replacement values
  3. Book values
  4. Intrinsic values

Market Value - This includes determining the weights or proportions using the recent market values of the various capital components. The problems along with the use of market values are as:

The market value of each security remains on changing on daily basis therefore market values can be computed simply at one point in time.

The market value of each security may be incorrect because of cases of over or under valuation in the market.

Book values - This involves the utilization of the par value of capital as shown in the balance sheet. The main problem with book values is such they are historical/past values showing the value of a security when in the market for the first time it was originally sold.

Replacement values - This contains determining the weights or proportions on the origin of amount such can be paid to replace the existing assets. The problem along with replacement values is such can assets never be replaced at ago and replacement values may not be determined objectively.

Intrinsic values - In this case the weights are determine on the basis of the real/intrinsic value of a given security. Intrinsic values may not be accurate since they are computed using historical/past information and are generally estimates.


Related Discussions:- Computation of weights or proportions

Traditional approach of financial management, traditional financial managem...

traditional financial management are concerned with raising funds and optimum utilisation.do you agree?explain.

Operations Management, You need cash and FAST! You jump out of your car at...

You need cash and FAST! You jump out of your car at a location known to have one ATM, but a history of a line. Usually you can expect to wait 200 seconds from the time you arrive

5 problem excel on time value concepts, How quickly could something like th...

How quickly could something like this be done? And how confidential is this? Has any student ever been caught using this service?

Financial analysis, Financial analysis: Financial analysis (also defin...

Financial analysis: Financial analysis (also defined to as financial statement analysis or accounting analysis or Analysis of finance) defines to an assessment of the viabilit

PERDIEM CLAIM, how to make a perdiem claim format to maintain the records o...

how to make a perdiem claim format to maintain the records of staff

Risk adjusted discounting rate – methods of computing cost, Risk Adjusted D...

Risk Adjusted Discounting Rate - Methods of Computing Cost of Capital This method is used to establish the discounting rate to be used for a provided project. The cost of capi

Corporate finance, I need report on Corporate Finance. Do you provide help ...

I need report on Corporate Finance. Do you provide help in topic Corporate Finance? I need expert's assistance to solve my college assignment. Please suggest if it works for me.

Eoq assumptions, EOQ Assumptions The basic EOQ model creat...

EOQ Assumptions The basic EOQ model creates the following supposition as: i) The demand is identified and constant over the year ii) The ordering cost is con

Foreign trade balance, Foreign Trade Balance If the Government buys or...

Foreign Trade Balance If the Government buys or imports much more than it sells or exports there will be a trade deficit such will require financing.The most important source

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