Consider the four major commodities traded on a commodity futures exchange today (year 10). The following table
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The futures exchange has now decided to create a commodity index based on the four commodities, with weights equal to their current relative importance in economic production. These indexes are back-calculated till year 1 using today's weights.
a. Would such an index give unbiased indications over the past 10 years?
b. What suggestions do you have regarding weights that can be used to back-calculate the indexes?
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