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1. Choice of base year on which to base the price changes
2. The selection of representative securities/firms
3. Combining the securities/firms to construct the index eg use of geometric mean
4. Use of suitable weight to be attached to the securities depending on their relative importance.
5. The weights/number of firms in a sector is kept constant over a reasonably long period.
Kavungya answered the question on March 12, 2019 at 05:38
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