The Reason Weights Are Used in an Aggregate Index Is

question 33

Multiple Choice

The reason weights are used in an aggregate index is to

• A) ensure that all items have an influence on the index which is relative to their respective importance.
• B) ensure that expensive items are considered more heavily.
• C) ensure that current prices will influence the index more than base prices.
• D) None of these alternatives is correct.

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Definitions:

Future Value

The equivalent value of an asset or money at a future date, which equals a certain present-day amount.

Interest Rate

The percentage at which interest is charged or paid on a sum of money, often expressed annually.

Cash Flows

Cash flows refer to the net amount of cash and cash-equivalents being transferred into and out of a business.

Quarterly Savings

Savings accumulated or set aside at the end of every quarter of the fiscal year.