Talk:V2 ratio

The V2 Ratio of a benchmark with itself is zero?

If the benchmark doubles over the investment period, and the investment IS also the same benchmark, the V2R will equal 2, not 0.

The only way the equation for V2R will equal zero is if either: 1) the denominator goes to infinity,

2) the numerator goes to zero:

    which is when:
       Vn/V0 = 1, (investment doesn't make any money)

What if the number of periods is 3 (months), and there are P=12 months in a year, and V0 = 1 and Vn = 0.5 which is where an investment is held for 3 months and loses half its value. Now, the numerator is negative 0.9375. 71.139.173.203 (talk) 05:33, 21 September 2013 (UTC)

I changed the lead slightly to hopefully clear up this confusion. If the investment is the benchmark then $V_{i}=1$ for every time $i=0,...,n$. Therefore even if the benchmark doubled it still follows that ${\frac {V_{n}}{V_{0}}}=1$ and the ratio is 0. Zfeinst (talk) 12:18, 21 September 2013 (UTC)