Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Fixed Weight Aggregates Method
In fixed weight aggregates method, the weights used are neither from base period nor from current period but from a representative period. These weights are generally referred to as representative weights or as fixed weights. These fixed weights are unaffected by the selection of the base period. This is the advantage under this method. The user of the method will be able to select a base year that is convenient to him enabling him to change the price base yet retaining the fixed weights.
The students may refer to the weights assigned to various industry groups constituting the Index of Industrial Production presented in the annexure.
Fisher's Ideal method
Prof. Irving Fisher has proposed a formula for constructing index numbers, which is called the 'Fisher's Ideal Index'. The Ideal index is given by the following formula:
As evident from the above formula,
Fisher's Ideal Index is the geometric mean of the Laspeyres and Paasche indices.
The following advantages can be cited in favor of Fisher's Ideal Index:
Theoretically, geometric mean is considered the best average for the construction of index numbers and Fisher's index uses geometric mean.
As already noted, Laspeyres index and Paasche index indicate opposing characteristics and Fisher's index reduces their respective biases. In fact, Fisher's ideal index is free from any bias. This has been amply demonstrated by the time reversal and factor reversal tests.
Both the current year and base year prices and quantities are taken into account by this index.
Fisher's Ideal Index
The index is not widely used owing to the practical limitations of collecting data. Fisher's Ideal Quantity Index can be found out by the formula,
Accounting Rate of Return (ARR): This technique relies on the rate of return every project will earn over its life. It takes the help of accounting profit while calculating the
Random Number Generation Since we have said that competitors' average price, quantity sold and cost behave in a random fashion but follow a normal distribution, if we want to d
Taxonomy of financial intermediaries We start by looking at the USA, the largest economy and financial system in the world. Subsequently we will turn to other countries. In the
The following are extracts of the Income Statement and Balance Sheet for Umar plc. Extract Balance Sheet at 30 June 20X2 20X1 £'000 £'000 £
What do you mean by pension funds? Pension funds: Pension funds give retirement income (as the form of annuities) to workers covered through a pension plan. They get cont
What is the meaning of Over-capitalisation It is the opposite of over trading. It means a company has a large volume of inventories, trade receivables and cash balances though
Q. Evaluae new options within current organization? Evaluating having completed self marketing successfully to prospective employers it is time to analyze new options within cu
Sarkozy Ltd is considering the selection of one of a pair of mutually exclusive investment projects. Both would involve purchase of machinery with a life of five years. Projec
Types of equaty Securities Equity securities, traditionally, are classified into two types when they are issued. They are: Common Stock, and Preferred Stock. Common Stoc
Internal Rate of Return (IRR) : This rate attempts to find the earnings rate, which equates the current value of the streams of earnings to the investment outlay. IRR is descri
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd