A price-weighted index is a
stock market index
In finance, a stock index, or stock market index, is an index that measures a stock market, or a subset of the stock market, that helps investors compare current stock price levels with past prices to calculate market performance.
Two of the ...
where each constituent makes up a fraction of the index that is proportional to its component, the value would be:
[ Price weighted adjustment factor formula via Wikinvest]
: Adjustment Factor = Index specific constant "Z" / (Number of shares of the stock * Adjusted stock market value before rebalancing)
A stock trading at $100 will thus be making up 10 times more of the total index compared to a stock trading at $10.
The
Dow Jones Industrial Average
The Dow Jones Industrial Average (DJIA), Dow Jones, or simply the Dow (), is a stock market index of 30 prominent companies listed on stock exchanges in the United States.
The DJIA is one of the oldest and most commonly followed equity inde ...
and
Nikkei 225
The Nikkei 225, or , more commonly called the ''Nikkei'' or the ''Nikkei index'' (), is a stock market index for the Tokyo Stock Exchange (TSE). It has been calculated daily by the '' Nihon Keizai Shimbun'' (''The Nikkei'') newspaper since 1950 ...
are examples of price-weighted stock market index.
See also
*
Fundamentally based indexes Fundamentally based indexes or fundamental indexes, also called fundamentally-weighted indexes, are indexes in which stocks are weighted according to factors related to their fundamentals such as earnings, dividends and assets, commonly used when pe ...
*
Capitalization-weighted index
A capitalization-weighted (or cap-weighted) index, also called a market-value-weighted index is a stock market index whose components are weighted according to the total market value of their outstanding shares. Every day an individual stock's ...
References
External links
*
Price-weighted calculation methodology via Wikinvest
Business terms
Financial markets
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