Which of the Following Statements Is True About the Comparison

question 74

Multiple Choice

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

• A) The Laspeyres index is more expensive to compute than the Paasche index.
• B) The data requirements are more stringent for the Laspeyres index than for the Paache index.
• C) Unlike the Laspeyres index,the Paasche index incorporates current expenditure patterns of consumers.
• D) Unlike the Paasche index,the Laspeyres index requires that the weights be updated each year and the index numbers be recomputed for all of the previous years.

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Definitions:

Extraordinary Item

Transactions and events that are both unusual and infrequent in nature, distinctly separate from the ordinary activities of the company, often excluded from the assessment of its ongoing operational performance.

Transitory Earnings

Earnings that are considered to be non-recurring or not indicative of the company's future earning potential.

Permanent Earnings

Profits generated by a company that are expected to continue in the future, excluding one-time events or transactions.

Implied Share Price

The calculated value of a company's share based on future earnings, cash flows, or market expectations.