Price-weighted index

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Price-weighted index

An index giving a greater influence to higher-valued stocks by weighting all component stocks by their price.

Price-Weighted Index

An index that tracks a number of securities in which price changes in stocks that already have higher prices affect the index's price changes more than other securities. For example, suppose an index tracks three stocks: A, B, and C. If A has a higher price than B and C, an uptick in A will be more likely to result in an uptick in the index as a whole (depending on how much more weighted it is). Price weighted indices are less common than capitalization-weighted indices, but the Dow Jones Industrial Average is a prominent example.
References in periodicals archive ?
The "Dow" is an abbreviation for the Dow Jones Industrial Average, which is a total return price weighted average based on the price movements of 30 blue chip stocks, computed by reinvesting quarterly dividends on a daily basis.
A price weighted average of 30 actively traded blue-chip stocks, primarily industrial industry stocks that trade on the New York Stock Exchange.