 | This article relies largely or entirely on a single source. (June 2009) |
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:[1]
- 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.