In a price weighted average stock market indicator series,the following type of stock has the greatest influence
A) The stock with the highest price
B) The stock with the lowest price
C) The stock with the highest market capitalization
D) The stock with the lowest market capitalization
E) The stock with the highest P/E ratio

Question

Quizplus · Accepted Answer

In a price weighted average stock market indicator series, the weight of each stock in the index is proportional to its price per share. Therefore, the stock with the highest price will have the greatest influence on the index as a whole. This is because a change in the price of a high-priced stock will have a larger impact on the index than a change in the price of a low-priced stock, even if the percentage change is the same.

In a Price Weighted Average Stock Market Indicator Series,the Following