Question

What is volume, risk and price variances?

Answer 1

Volume in financial context refers to the number of contracts or shares that have been traded underlying an entire market or security during specific time period. Each transaction contributes towards count associated with the total volume, thus for every purchaser there exist a seller. When both seller and buyer agree to undergo a transaction at specific price it is marked as one transaction. If the number of transaction that have occurred in a day accounts for five, then the volume for that day construe to five.

Risk refers to the negative occurrence, loss, liability, injury and damage which have been resulted due to internal and external vulnerabilities. Primitive action helps avoid risk to great extent. Risk includes a chance whereby the actual return from the investment varies with the return expected from it. It is the uncertainty that exists in future from expected outcome or expected earnings.

Price variance refers to the units cost associated with the purchased item in actual less the standard cost. It is further multiplied with the quantity related with units purchased in actual. In other words it refers the difference underlying the standard price and the price paid for purchasing an item by the company in actual multiplied by the number of units that have been purchased.