Which of the Following Statements Is True About the Laspeyres

question 15

Multiple Choice

Which of the following statements is true about the Laspeyres and Paasche indices?

• A) As long as the evaluation period is the same, the two indices usually yield the same value.
• B) The difference in the values of the two indices, if any, can usually account for the varying price levels across periods.
• C) The Laspeyres price index uses the current period quantities as weights, as opposed to the base period quantities used by the Paasche price index.
• D) The greater the length of time between periods, the higher the chances of variation between the values of the two indices.

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Definitions:

Long-Term Bond

A bond that matures in more than ten years, offering the bondholder a specified interest rate over a long period.

Investments In Associates

Investments in other companies where the investor has significant influence but does not control or jointly control the company.

Current Assets

These are assets that a company expects to convert into cash, sell, or consume within one year or its operating cycle, whichever is longer.

Debt Securities

Financial instruments representing money borrowed that must be repaid, including bonds, notes, and bills.