Chain Index Numbers

So far, we have constructed index numbers with a fixed base. Sometimes, comparison between the current/given year and the base year becomes meaningless once time elapses making the base year remote. An index can be made more representative by using the chain base method of constructing index numbers. In this method, the base year is not fixed but changes from year to year. Here, new relatives are constructed for each year with the previous year as base. The new relatives enable comparison between one period and another period which succeeds it and hence referred to as 'Link relatives'. When these link relatives are associated to a common base, and chained together by successive multiplication, the formation of a chain index number results.

Chain index for a given year

where,

Link relative =

x 100

Posted Date: 9/17/2012 3:07:37 AM | Location : United States

Ask an Expert

Related Discussions:- Chain index numbers, Assignment Help, Ask Question on Chain index numbers, Get Answer, Expert's Help, Chain index numbers Discussions

Write discussion on Chain index numbers
Your posts are moderated

Write your message here..

Related Questions

Finance for managers, Before tax cost of debt and after tax cost of debt; ... Before tax cost of debt and after tax cost of debt; Personal finance problem. David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following inform

Break-even point, Break-Even Point The measure of products or services... Break-Even Point The measure of products or services organizations must sell for its revenue from sales to equal its cost of production for the same number of units. Hence, se

Operating cycle-carrots in uganda, discuss the applicability discuss the applicability

Definition of financial management, DEFINITION OF FINANCIAL MANAGEMENT ... DEFINITION OF FINANCIAL MANAGEMENT Financial Management is a stream concerned with the generation and allotment of scarce resources (generally funds) to the most proficient use

Evaluate the extent to which the balanced scorecard, Evaluate the extent to... Evaluate the extent to which the Balanced Scorecard: The Balanced Scorecard has been described as an effective measurement system which enables managers of an organisation to

Inflation rate is likely after year 1, a) Suppose that the real risk-free r... a) Suppose that the real risk-free rate, r*, is 3% and that inflation is assumed to be 7% in Year 1, 5% in Year 2, and 4% after that. Suppose also that all Treasury securities are

Define in brief about cash and share exchange, Define the both cash and sha... Define the both cash and share exchange Generally both cash and share exchange are used to make the offer more attractive. Other forms of consideration include: Paper consid

Caselets, caselets of bajaj electronics caselets of bajaj electronics

OPERATING CYCLE, DISSCUSS THE APPLICABILITY OF AN OPERATING CYCLE IN A VEGE... DISSCUSS THE APPLICABILITY OF AN OPERATING CYCLE IN A VEGETABLE GROWING BUSINESS IN UGANDA?

Reinvestment risk, Reinvestment risk is the risk involved in reinvesting th... Reinvestment risk is the risk involved in reinvesting the proceeds received from the issuer against callable bonds. During falling interest rate periods, investor canno