Tag: price-weighted index

The Dow Jones Industrial Average (DJIA), one of the most closely monitored stock indices in the world, is distinctive in its approach to gauging market performance. Unlike indices that employ market capitalization weighting, the Dow employs a price-weighting system. Understanding the nuances of market cap and price weighting is key to interpreting the Dow’s movements and how it reflects broader market trends. Price Weighting in the Dow The Dow Jones is composed of 30 prominent companies listed on stock exchanges in the United States. The index's price weighting methodology assigns importance...