A Simple Price Index Tracks the Price of a Group

question 158

True/False

A simple price index tracks the price of a group of commodities at a given period of time to the price paid for that group of commodities at a particular point of time in the past.

---

Definitions:

Bond

A fixed-income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental, which pays periodic interest and the return of the principal at maturity.

Treasury Bill

Short-term, highly liquid government debt obligation issued at a discount from the face value and returning the face amount at maturity.

Par Value

The nominal value of a security stated by the issuer.

Effective Annual Yield

This refers to the real return on an investment, taking into account the effects of compounding interest over a year.