CFA Practice Question

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CFA Practice Question

The following dataset shows the change of a consumption basket over time:

2013 (price/quantity)- Bread: $0.77/50; Milk: $1.22/30
2014 (price/quantity)- Bread: $0.80/52; Milk: $1.24/28

The denominator of the Laspeyres index should be calculated as ______.

A. $0.77 x 50 + 1.22 x 30
B. $0.80 x 52 + 1.24 x 28
C. $0.77 x 52 + 1.22 x 28
Correct Answer: A

The Laspeyres index uses the same quantity data from only the base period. B is the numerator and C is the denominator of the Paasche index.

User Contributed Comments 7

User Comment
davcer paasche is old composition at current prices/old composition at base prices the mock exam morning sessions put it this way
davcer sorry I was wrong, paasche uses current composition
Shaan23 I always think of Laspereyes as LAST in the denominator. Old stuff
schweitzdm Based off of this question's respective reading I had no idea how to answer it.
tangyjab The numerator of the Laspeyres index should be 0.80 x 50 + 1.24 x 30
cfastudypl tangyjab, please read the comment to the answer as you are wrong.
sshetty2 I don't think tangy is wrong...
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