In Computing the Consumer Price Index,a Base Year Is Chosen

question 52

Multiple Choice

In computing the consumer price index,a base year is chosen.Which of the following statements about the base year is correct?

• A)The base year is always the first year among the years for which computations are being made.
• B)It is necessary to designate a base year only in the simplest case of two goods;in more realistic cases,it is not necessary to designate a base year.
• C)The value of the consumer price index is always 100 in the base year.
• D)The base year is always the year in which the cost of the basket was highest among the years for which computations are being made.

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Definitions:

Efficient Market

A concept where all available information is fully reflected in asset prices, making it impossible to consistently achieve higher returns than the overall market through stock selection or market timing.

Security Prices

The current market price at which a particular security can be bought or sold.

Superior Returns

Financial gains that exceed the average market return or benchmarks, often sought by investors.

Relative Strength

A momentum investing technique that compares the performance of a security or index to the overall market or a specific benchmark.