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
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?