Trisha Shetty (Editor)

Price weighted index

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A price-weighted index is a stock market index where each constituent makes up a fraction of the index that is proportional to its component, the value would be:

  • 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 and Nikkei 225 are examples of price-weighted stock market indexes.

    References

    Price-weighted index Wikipedia
    (Text) CC BY-SA


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