Find the price relatives for the four stocks making up the Boran index in Exercise 20.
Find the January Year 3 and March Year 3 Boran indexes by using the weighted aggregates of price relatives.
Answer to Problem 21E
The price relatives for the four stocks for January Year 3 are givrn below:
Year | Year 1 Base | January Year 3 | |
Oil | 31.50 | 22.75 | 72.2 |
Computer | 65 | 49 | 75.4 |
Steel | 40 | 32 | 80 |
Real Estate | 18 | 6.50 | 36.1 |
The price relatives for the four stocks for March Year 3 are given below:
Year | Year 1 Base | March Year 3 | |
Oil | 31.50 | 22.50 | 71.4 |
Computer | 65 | 47.50 | 73.1 |
Steel | 40 | 29.50 | 73.8 |
Real Estate | 18 | 3.75 | 20.8 |
The Boran index for January Year 3 by using the weighted aggregates of price relatives is 73.5.
The Boran index for March Year 3 by using the weighted aggregates of price relatives is 70.10.
Explanation of Solution
Calculation:
The data shows that the price per share for Year 1, Year 2, and Year 3.
The price relatives for the four stocks for January Year 3 are obtained below:
Year | Year 1 Base | January Year 3 | |
Oil | 31.50 | 22.75 | |
Computer | 65 | 49 | |
Steel | 40 | 32 | |
Real Estate | 18 | 6.50 |
The price relatives for the four stocks for March Year 3 are obtained below:
Year | Year 1 Base | March Year 3 | |
Oil | 31.50 | 22.50 | |
Computer | 65 | 47.50 | |
Steel | 40 | 29.50 | |
Real Estate | 18 | 3.75 |
The Boran index for January Year 3 and March Year 3 by using the weighted aggregates of price relatives is obtained below:
Thus, the Boran index for January Year 3 by using the weighted aggregates of price relatives is 73.5.
The Boran index for March Year 3 by using the weighted aggregates of price relatives is obtained below:
Thus, the Boran index for March Year 3 by using the weighted aggregates of price relatives is 70.10.
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Chapter 20 Solutions
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