# Average

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Related to Measures of central tendency: standard deviation, measures of dispersion

## Average

An arithmetic mean return of selected stocks intended to represent the behavior of the market or some component of it. One good example is the widely quoted Dow Jones Industrial Average, which adds the current prices of the 30 DJIA stocks, and divides the results by a predetermined number, the divisor.

## Average (across-day) measures

An estimation of price that uses the average or representative price of a large number of trades.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

## Average

A simple way to calculate the relative price of an index of stocks that involves adding the prices of all the stocks in the index and dividing by the total number of stocks. Market averages may be weighted, for example, for price or market capitalization. Movements in the market average of an index are considered a way to observe trends in the health of the companies represented in it. Some market averages are taken as an indicator of health in the broader economy; prominent examples of this include the Dow Jones Industrial Average and S&P 500 indices.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

## average

See averages.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

## Average.

A stock market average is a mathematical way of reporting the composite change in prices of the stocks that the average includes.

Each average is designed to reflect the general movement of the broad market or a certain segment of the market and often serves as a benchmark for the performance of individual stocks in its sphere.

A true average adds the prices of the stocks it covers and divides that amount by the number of stocks.

However, many averages are weighted, which usually means they count stocks with the largest market capitalizations more heavily than they do others. Weighting reflects the impact that the stocks of the biggest companies have on the markets and on the economy in general.

The Dow Jones Industrial Average (DJIA), which tracks the performance of 30 large-company stocks, is the most widely followed market average in the United States.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
My students do fairly well when it comes to determining the mean, median and mode but they are not able to explain what those measures tell about a set of data or why it is important to be able to determine the measures of central tendency. I would like to have my students to be better able to do that this year.
Like measures of central tendency, measures of dispersion are also based on levels of measurement.
In this case, different measures of central tendency may differ in level, but they will all change by the same percentage and will therefore show the same index value relative to a base year.
He gives basic terminology and concepts such as scales of measurement and variables, then launches into a range of methods displaying data, measures of central tendency and variability, normal distribution, basic concepts of probability, sampling distributions and hypothesis testing, correlation, regression, multiple regression, power, the various analyses of variance, the chi-square, nonparametric and distribution-free statistical tests, and a very handy set of instructions on choosing the appropriate analysis.
Topics discussed are data analysis; measures of central tendency, dispersion, and position; probability; counting rules; normal and binomial distributions; and correlations.
Demonstrate the need for other measures of central tendency by pointing out the main weakness of the mean--the extent to which its value can be affected by extreme scores.
When measures of central tendency are needed, means are generally reported.
His topics include descriptive methods: measures of central tendency and variability, the foundation of standard normal distribution: describing individual scores, hypothesis testing: one sample case for the mean, making inferences about population proportions, categorical analysis, and methods that are not the most widely used but are important to know for determining practical and personal significance.

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