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:

Equity

The value of an ownership interest in property, including shareholders' equity in a corporation, representing the residual asset value once liabilities have been subtracted.

Public Offering

The process of issuing new securities for sale to the public, usually done to raise capital for expansion or other business activities.

Mature Company

A company that has reached a stage in its life cycle where growth slows to the industry or economy's average, often characterized by a stable customer base and predictable financial returns.

Private Placements

The sale of securities to a relatively small number of selected investors as a way of raising capital, bypassing public offering processes.