You have 5 stocks in your investment portfolio.You want to keep track of your portfolio's performance over the last 2 years.You have data on each of the stock's average price and the number of shares of each stock for every day of the last 2 years.Which of the following would be the most appropriate analysis to perform?
A)Simple price index
B)Laspeyres price index
C)Unweighted price index
D)Unweighted aggregate price index.

Question

Quizplus · Accepted Answer

The most appropriate analysis to perform would be the Laspeyres price index. This index is used to track the performance of a fixed basket of goods over time, which fits our scenario of tracking the performance of a fixed portfolio of stocks over the past 2 years. The Laspeyres index uses a fixed base period to compare the current cost of the basket of goods to the cost of the basket in the base period. This allows us to see the percentage change in value over time for our portfolio.

You Have 5 Stocks in Your Investment Portfolio