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Valuation of Shares - Fair Value Method Video Lecture | Advanced Corporate Accounting - B Com

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FAQs on Valuation of Shares - Fair Value Method Video Lecture - Advanced Corporate Accounting - B Com

1. What is the fair value method in the valuation of shares?
Ans. The fair value method is a technique used to determine the value of shares based on the current market price, taking into account factors such as supply and demand, company performance, and economic conditions.
2. How is fair value different from book value when valuing shares?
Ans. Fair value reflects the actual market price of a share at a given point in time, while book value is the value of a share based on the company's financial statements. Fair value is more reflective of the current market sentiment, while book value may not accurately represent the true value of a share.
3. What are the key factors considered when using the fair value method to value shares?
Ans. Some key factors considered in the fair value method include market conditions, company performance, industry trends, economic indicators, and any specific events that may impact the share price.
4. How is the fair value method helpful for investors and companies?
Ans. The fair value method provides investors with a more accurate assessment of the value of their investments, helping them make informed decisions. For companies, it helps in determining the true worth of their shares and can be used for financial reporting purposes.
5. Are there any limitations to using the fair value method for valuing shares?
Ans. Yes, some limitations include the volatility of market prices, potential for manipulation, and the subjectivity involved in determining fair value. Additionally, external factors such as market speculation and investor sentiment can impact the accuracy of the valuation.
89 videos|52 docs|22 tests
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