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This is the formula that was used for the old Financial Times stock market index (the predecessor of the FTSE 100 Index). It was inadequate for that purpose. In particular, if the price of any of the constituents were to fall to zero, the whole index would fall to zero.
A price index (plural: "price indices" or "price indexes") is a normalized average (typically a weighted average) of price relatives for a given class of goods or services in a given region, during a given interval of time.
For example, in the Consumer Price Index, a reference year's "market basket" is assigned an index number of 100. In 2019 if a market basket price is 55 and the basket were to double the following year, in 2020, then the index would rise to 200. This is done by performing a simple calculation: Dividing the new year market basket price by the ...
These equations show that the stock return is influenced by the market (beta), has a firm specific expected value (alpha) and firm-specific unexpected component (residual). Each stock's performance is in relation to the performance of a market index (such as the All Ordinaries). Security analysts often use the SIM for such functions as ...
A CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically. Sub-indices and sub-sub-indices can be computed for different categories and sub-categories of goods and services, which are combined to produce the overall index with weights reflecting their shares in the total of the consumer expenditures covered by the ...
The Harmonised Index of Consumer Prices (HICP) is an indicator of inflation and price stability for the European Central Bank (ECB). It is a consumer price index which is compiled according to a methodology that has been harmonised across EU countries. The euro area HICP is a weighted average of price indices of member states who have adopted ...
A hedonic index is any price index which uses information from hedonic regression, which describes how product price could be explained by the product's characteristics.. Hedonic price indexes have proved to be very useful when applied to calculate price indices for information and communication products (e.g. personal computers) and housing, [1] because they can successfully mitigate problems ...
We can use the value of the Lerner index to calculate the marginal cost (MC) of a firm as follows: 0.4 = (10 – MC) ÷ 10 ⇒ MC = 10 − 4 = 6. The missing values for industry B are found as follows: from the E d value of -2, we find that the Lerner index is 0.5. If the price is 30 and L is 0.5, then MC will be 15: