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A security analyst wishes to construct an index to reflect the changes in the price of five stocks in a certain portfolio. The following figures represent the average price and numbers of shares purchased for each stock for 1988-1990:

	1988	1989	1990
Stock	Average Shares Price Purchased	Average Shares Price Purchased	Average Shares Price Purchased
A	35 110	45 210	40 215
B	55 210	50 160	55 115
C	65 160	85 260	75 115
D	50 310	55 260	60 215
E	25 200	30 210	40 310

a. Construct an unweighted aggregate index using 1988 as a base year. What are the disadvantages of this type of index?

b. Construct a Laspeyers index using 1988 as a base year. What are the disadvantages of thus type of index?

c. Construct a Paasche index using 1988 as a reference base year. What are the disadvantages of this type of index?

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Statistics and Probability, Statistics

Category:- Statistics and Probability
Reference No.:- M91000180

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