ValueÃ¢ÂÂincome ratios, such as dividend yields in finance and priceÃ¢ÂÂrent ratios in housing and real estate markets, impact society in a variety of ways. This paper proposes a new type of the present value model that features income growth with time-varying yields. It offers a new risk perspective, which may alleviate timid investor behavior in market downturns while cooling down the market in seemingly booming times. A binding relationship, the valueÃ¢ÂÂincome ratio adjusted by yields of the asset and growth in income, is revealed. This has notable implications for empirical research, which examines valueÃ¢ÂÂincome ratios time and again. Incorrectly perceived market behavior distorts the formation of investor behavior, and vice versa, which has serious consequences to the functioning of the market and beyond. 
A new approach to estimating valueÃ¢ÂÂincome ratios with income growth and time-varying yields