price-weighted average

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.

price-weighted average

A security average that is weighted by the market price of each security included in the average. Thus, securities that have high market prices tend to be more heavily weighted and to have more influence on changes in a price-weighted average. The Dow Jones Averages are examples of price-weighted averages. Compare market-value-weighted average.
References in periodicals archive ?
The Dow is a price-weighted average of blue chip stocks of companies that have a long record of profit growth and dividend payment.
Intel's sharp decline did not affect the Dow as much as the Nasdaq, since the Dow is a price-weighted average, while the Nasdaq is a market-cap weighted average.

Full browser ?