Market value-weighted index


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Market value-weighted index

An index of a group of securities computed by calculating a weighted average of the returns on each security in the index, where the weights are proportional to outstanding market value.

Capitalization-Weighted Index

An index in which the price is determined by the price of individual stocks, weighted for total market value. For example, if the price of a component stock of the index changes, its effect on the index as a whole is proportionate to share's price multiplied by the number of shares the company has outstanding. This means that changes in price will affect the index more if the component company has greater value. Most non-American market value-weighted indices give further weighting (called float-weighted indexing) to properly account for partial government ownership of many large corporations. This method of index weighting contrasts with a price-weighted index, in which all price changes are weighted differently, and a market share-weighted index, which weights only by the number of shares outstanding and not by their value. Major examples of a market value-weighted index include the NASDAQ Composite Index and the Standard & Poor's 500. The latter uses float-weighted indexing to match its calculations more closely with foreign counterparts.
References in periodicals archive ?
In parallel, the Market Value-Weighted Index for stocks traded on the BSE decreased by 6.
The fund will track the performance of the S&P Municipal Yield Index, a market value-weighted index with 70 percent of its market value allocated to high yield bonds that are non-rated or rated below investment grade, 20 percent to 'Baa' or 'BBB' rated bonds, and 10 percent to 'A' rated bonds.
The NCREIF Property Index is a market value-weighted index similar to the S&P 500 Index; this means that the return on a $100 million property will carry more weight in the index compared to the returns generated by a $10 million property.
The Index is a market value-weighted index with 70 percent of its market value allocated to high yield bonds that are non-rated or rated below investment grade, 20 percent to Baa or BBB rated bonds, and 10 percent to A rated bonds.