What is the correct way to average a ratio? First average each variable, then calculate the ratio/percentage? Does it matter, what are the implications? Thanks

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- Nov 11th 2009, 12:49 PMbs0dAveraging Percentages - correct way to average a ratio?
What is the correct way to average a ratio? First average each variable, then calculate the ratio/percentage? Does it matter, what are the implications? Thanks

- Nov 11th 2009, 01:33 PMstapel
Rates don't usually get averaged. Without specific information, I'm afraid it's going to be difficult to give a specific answer. Sorry! (Blush)

- Nov 11th 2009, 01:42 PMbs0d
Here is an example:

variables:

market price, price index, premium and realized price (index + premium)

ratio:

realized price as a % of market price

so if you had monthly data for the variables - could you simply average the ratio through the time series? or do you need to average the variables before calculating the average ratio? - Nov 14th 2009, 11:05 AMbs0d
? anyone ?