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 ?
It now ranks as the sixth smallest member of the Dow by market value and carries the index's lowest stock price, making it the least influential component of the price-weighted average.
The collapse shaved 4.6 percent off the index, which represents a price-weighted average of 30 blue-chip American stocks that are generally the leaders in their industry, RT reported.
Founded in 1896, the DJIA is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange (NYSE) and Nasdaq.
It is a price-weighted average of 30 very large and significant stocks traded on the New York Stock Exchange and the NASDAQ.

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