Three investments, A, B and C, are grouped into a single fund with weightings of 145, 156 and 99

respectively. Over a period of 4 years they increase in value, with each increase expressed as an index,

as shown in the following table:

Investment

Index

Weighting

A

154

145

B

145

156

C

130

99

(a)

Calculate the composite (weighted) index for the three investments combined.

(4 marks)

A second fund includes the same three investments, A, B and C, together with a fourth investment D.

The weightings of investments A, B and C are as above, and the weighting of investment D is 50.

Over the same period, the weighted index of the four investments combined is 141.6.

(b)

Calculate the index representing the increase in value of investment D, over the four-

year period.

(3 marks)

(c)

Working on the basis of

simple interest

, calculate the percentage increase per annum

in investment A over the period.

(3 marks)

(d)

Discuss the why index number is important for calculating inflation (190 words)

(10 marks)

(Total 20 marks)