unweighted index(redirected from Unweighted Indices)
An index where all securities represented in it affect the index equally. That is, an unweighted index does not give any preference to aspects like market capitalization or price when one calculates its value. For example, given an unweighted index of three stocks, one priced at $10, one at $15, and one at $20, the value of the index will be $15, which is simply the average of the three prices. The Value Line averages are prominent examples of unweighted indices.
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A stock price index that is calculated with equal weighting for each component. Unweighted indexes such as the Value Line averages are useful for individuals who invest an equal dollar amount in each stock.
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.